Managing Global Human Resources Essay, Research Paper
The environment in which business competes
is rapidly becoming globalized. More and more companies are entering international
markets by exporting their products overseas, building plants in other
countries, and entering into alliances with foreign companies. Global competition
is driving changes in organizations throughout the world. Companies are
attempting to gain a competitive advantage, which can be provided by international
expansion. Deciding whether to enter foreign markets and whether to develop
plants or other facilities in other countries is no simple matter and many
human resource issues surface. (Noe, Hollenbeck, Gerhart, and Wright; 534)
Doing business globally requires that adaptations
be made to reflect cultural and other factors that differ from country
to country and from continent to continent. The nature and stability of
political systems vary in character and stability, with contracts suddenly
becoming unenforceable because of internal political factors. Human resource
regulations and laws vary among countries in character and detail. In many
countries in Western Europe, laws on labor unions and employment make it
difficult to reduce the number of workers because required payments to
ex-employees can be very high. Equal employment legislation exists to varying
degrees. In some countries, laws address issues such as employment discrimination
and sexual harassment.
Cultural forces represent another important
concern affecting international human resource management. Culture is composed
of the societal forces affecting the values, beliefs, and actions of a
distinct group of people. (Mathis & Jackson, 171) Cultural differences
certainly exist between nations, but also between countries. Getting individuals
from different ethic or tribal backgrounds to work together may be very
difficult in some parts of the world. Culture is important to human resources
for two reasons. It determines the other factors? political-legal, economic,
and education-human capital factors. Culture affects human capital, because
if education is greatly valued by culture, then members of the community
try to increase their human capital. (Noe, Hollenbeck, Gerhart, and Wright;
537) Economic conditions vary also from country to country. Many lesser-developed
nations are receptive to foreign investment in order to create jobs for
their growing populations. In many developed countries, especially in Europe,
unemployment has grown, but employment restrictions and wage levels remain
high.
The internationalization of U.S. corporations
has grown than the internationalization of human resource management. International
human resource management differs from domestic human resource management
in several ways. In the first place, it places a greater emphasis on functions
and activities such as relocation, orientation, and translation services
to help employees adapt to a new and different environment outside their
own country. Assistance with tax matters, baking, investment management,
home rental while on assignment, and coordination of home visits is also
usually provided by the human resource department. Larger corporations
have a full-time staff of human resource managers devoted to assisting
globalization. For example, McDonald?s has a team of HR directors who travel
around the world to help country managers stay updated on international
concerns, policies, and programs. The human resource department in an overseas
unit must be particularly responsive to the cultural, political, and legal
environments. Companies such as Shell, Xerox, Levi Strauss, Digital, and
Honeywell have made a special effort to create codes of conduct for employees
throughout the world to make certain that standards of ethical and legal
behavior are known and understood. (Sherman, Bohlander, and Snell; 633)
A growing number of organizations that
operate only within one country are recognizing that they must change and
develop a more international perspective. Organizations may pass through
three stages that are import-export (national) companies, multinational
enterprises (MNE), and global organizations. National companies do not
become global companies immediately. Involvement in international HRM depends
greatly on a company’s phase of globalization. Import-export firms. Firms
in the first phase of globalization simply move products across national
boundaries. The firm does not employ people in other countries, except
a few managers responsible for negotiating business agreements. These agreements
usually involve buying or selling complete products or services. Import-export
firms need to understand their trading partners’ cultures and usually must
overcome communication barriers to negotiate agreements. Negotiations are
usually done by expatriate representatives, but expatriates are not employed
as extensively by import-export firms as by multinational enterprises.
HR policies and practices remain relatively unchanged from the company’s
traditional home-base practices. (HR Magazine,06-01-1995)
Multinational enterprises (MNEs). Firms
in the second phase of globalization have strategic corporate units located
in foreign countries. Part of the firm’s goods or services may be produced
in one country, then possibly moved to another country for additional assembly,
and ultimately distributed to other countries where they are sold by employees
of the firm. MNEs typically make extensive use of expatriate managers who
are sent from headquarters to oversee foreign operations. Expatriate managers
play important strategic roles. They coordinate between subsidiaries and
headquarters, implement strategy, ensure the quality and effectiveness
of organizational control systems, and manage global information systems.
They also gain expertise in international business skills that are critical
to ensuring that top executive positions are filled by competent replacements
with the necessary international experience and perspectives. Multinational
enterprises hiring workers in foreign countries must create and administer
HR practices adapted to each country. In addition to hiring, some of the
most significant HR issues for MNEs are training a foreign workforce, complying
with the host country’s employment laws, monitoring labor costs, selecting
expatriates, and helping them and their families succeed in the new assignment.
(HR Magazine, 06-01-1995)
Global firms. Firms in the final phase
of globalization have strategic corporate units in multiple countries that
interact with both headquarters and each other. Specialized functions may
be performed in different countries – for example, engineering in one country,
research in another country and production in yet another. People and products
are moved extensively across national boundaries to meet company demands.
Global firms make moderate use of expatriate managers. Other professional
employees may also be asked to relocate. Expatriate managers provide leadership
and continuity in the various divisions. These foreign assignments help
the managers in their career development, with one or more foreign assignments
considered essential for progression to higher levels of leadership.
When organizations expand to other countries,
they must develop operations and staff the operations in those countries.
Large multinational enterprises and global organizations typically employ
individuals from throughout the world. International employees can be placed
in different classifications. An expatriate is an employee working in a
unit or plant that is not a citizen of the country in which the unit or
plant is located but is a citizen of the country in which the organization
is headquartered. A host-country national is an employee working in a unit
or plant that is a citizen of the country in which the unit or plant is
located but where the unit or plant is operated by an organization headquartered
in another country. A third-country national is a citizen of one country,
working in a second country, and employed by an organization headquartered
in a third country.
Each of these individuals present some
unique human resource management challenges. Each is a citizen of a different
country, different tax laws and other factors applied. Human resource professionals
have to be knowledgeable about the laws and customs of each country. They
must establish appropriate payroll and record-keeping procedures to ensure
compliance with varying regulations and requirements. Many MNEs use expatriates
to ensure that foreign operations are linked effectively with the parent
corporations. Expatriates are used to develop international capabilities
within an organization. Experienced expatriates can provide great talent
that can be tapped as the organization expands its operations more broadly
into more countries. Using host-country nationals is important if the organization
wants to establish clearly that it is making a commitment to the host country
and not just setting up a foreign operation. (Mathis & Jackson, 173)
Host-country nationals often know the culture, the politics, the laws,
and how business is done better than an outsider would. The use of third-country
nationals is a way to emphasize the global approach that is being taken.
These individuals are used to handle responsibilities throughout a continent
or region.
Employee recruitment in other countries
is subject to more government regulations than it is in the United States.
Regulations range from those that cover procedures for recruiting employees
to those that govern the employment of foreign labor or require the employment
of the physically disabled, war veterans, or displaced persons. (Sherman,
Bohlander, and Snell; p. 634) All countries have work-permit or visa
restrictions that apply to foreigners. A work permit is a document issued
by a government that grants the authority to foreigners to find employment
in that country. Foreign workers invited to come to perform needed labor
are the guest workers. The employment of foreigners may involve lower direct
labor costs, but indirect cost such as language training, health services,
recruitment, transportation and so on may be substantial.
The selection process for an international
assignment should provide a true picture of the life, work, and culture
to which the employee may be sent. Human resource managers should prepare
a comprehensive description of the job to be done. The description should
note responsibilities that would be unusual in home country. The responsibilities
might include negotiating with public officials; interpreting local work
codes; and responding to ethical, moral, and personal issues such as religious
prohibitions and personal freedoms. The selection process should emphasize
different employment factors, depending on the extent that one would have
with the local culture and the degree to which the foreign environment
differs from the home environment. If a candidate for expatriation is willing
to live and work in a foreign environment, and indication of his or her
tolerance of cultural differences should be obtained. The finding employees
who can meet the demands of working in a foreign environment is one of
the toughest jobs for many organizations. Many companies have been hesitant
to send women on overseas assignments. Executives assume that women do
not want international assignments, but the reality is that the rate is
equal to that of men. It is also important that companies are increasingly
using transnational teams to conduct international business. These teams
are especially useful for performing tasks that the firm as a whole is
not yet structured to accomplish. They might be used to transcend the existing
organizational structure to customize a strategy for different geographic
regions, transfer technology form one part of the world to another, and
communicate between headquarters and subsidiaries in different countries.
The fundamental task in forming a transnational team is assembling the
right group of people who can work together effectively to accomplish the
goals of the team. Many companies try to build variety into their teams
in order to maximize responsiveness to the special needs of different countries.
Employees that work in international area
face special activities as orientation and training, continuing employee
development, and readjustment training and development. The orientation
and training that expatriates and their families receive before the international
assignment begins include work adjustment, interaction adjustment and general
adjustment such as language, culture, history, and living conditions. Career
planning and continued involvement of expatriates in corporate employee
development activities are essential. One of the greatest deterrents to
accepting foreign assignments is employees? concern that they will be out
of sight and out of mind. If businesses are to be managed effectively
in an international setting, managers need to be educated and trained in
global management skills. For example, Levi Strauss has identified the
following six attributes of the global manager. Those are the ability to
seize strategic opportunities; ability to manage highly decentralized organizations;
awareness of global issues; sensitivity to issues to diversity; competence
in interpersonal relations; and skill in building community. (Sherman,
Bohlander, and Snell; 640)
Organizations with employees in many different
countries face some special compensation pressures. Variations in laws,
living costs, tax policies, and other factors all must be considered in
establishing the compensation for expatriate managers and professionals.
Even the value of the U.S. dollar can be tracked and adjustments made as
the dollar rises or falls in relation to currency rates in other countries.
Add to all of these concerns the need to compensate employees for the costs
of housing, schooling of children, and yearly transportation home for themselves
and their family members. Many multinational firms have compensation programs
that use the balance-sheet approach that provides international employees
with a compensation package that equalizes cost differences between the
international assignment and the same assignment in the home country. Unlike
the balance-sheet approach, a global market approach to compensation requires
that the international assignment must be viewed as continual though the
assignment may take the employee to different countries for differing lengths
of time.
The nature of employee and labor relations
varies form country to country. When international operations are considered,
concerns related to health safety, and security must be evaluated. It is
important to understand the applicable labor-management laws, regulations,
and practices before commencing operations in foreign countries. With more
and more expatriates working internationally, especially in the less-developed
countries, health and safety issues are arising and addressing these issues
is part of the human resource role. Another consideration is provision
of emergency evacuation services. Many global firms purchase coverage for
their international employees from an organization that provides emergency
services, such as International SOS, Global Assistance Network, or U.S.
Assist.
The role of unions differs from the unions
in the United Stated to the unions in other countries. It depends on many
factors, such as the level of per capita, mobility between management and
labor, homogeneity of labor and level of employment. Labor relations in
Europe differ form those in the United States in certain characteristics:
In Europe, organizations negotiate the agreement with the union at the
national level though the employer association representing their particular
industry. Unions in many European countries have more political power than
those in the U.S., with the result that when employers deal with the union
they are dealing indirectly with the government. There is a greater tendency
in Europe for salaried employees to be unionized.
The global expansion of IHRIM is in direct
support of IHRIM?s mission statement:
?To be, internationally, the leading association
enabling customers to achieve strategic objective through the integration
of information technology and human resource management.? (IHRIN, 05-29-2000)
WORK CITED
Cherrington, David J., Laura Zaugg Middleton.
An Introduction To Global Business Issues. www.elibrary.com
HR Magazine. 06-01-1995
Internet available:
www.ihrin.org/affiliates/index.cfm
Mathis, Robert L., John H. Jackson. Human
Resource Management. Essential Perspectives. 1st edition. South-Western
College Publishing. Cincinnati, 1999.
Noe, Raymond A., John R. Hollenbeck, Barry
Gerhart, and Patrick M. Wright. Human Resource Management. Gaining
A Competitive Advantage. 3rd edition. Irwin McGraw-Hull. Boston,
2000.
Sherman, Arthur, George Bohlander, and
Scott Snell. Managing Human Resources. 11th edition. South-Western
College Publishing. Cincinnati, 1998.