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Practices in international

Human Resource
Management

Name : Navneet Bali

Course : PGDFM 2010-12

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INTRODUCTION

Human resource management (HRM) is universal in terms of strategies,


policies and processes. The term has gradually replaced personnel
management. Managing and developing human resources in the international
(global) setting is increasingly recognized as a central challenge, particularly
to multinational enterprises (MNEs). Human resource management is both
academic theory and a business practice that addresses the theoretical and
practice techniques of managing a workforce. While the theoretical aspects of
the discipline may also be universal, the same cannot be said of its practice.

HUMAN RESOURCE MANAGEMENT

Human resource management is the strategic and coherent approach to the


management of an organization’s most valued assets – the people working
there who individually and collectively contribute to the achievement of the
objectives of the business. The terms “human resource management” (HRM)
and “human resources” (HR) have largely replaced the term “personnel
management” as a description of the processes involved in managing people
in organizations.

Human resource management can also be defined as the function within an


organization that focuses on recruitment of, management of, and providing
direction for the people who work in the organization. As a change agent, it is
concerned with the nature of and regulation of the employment relationship at
the level of the workplace and broader society.

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The human resource management model emphasises.

• The need to search for new ways of working

• The central role of managing in promoting change

• The treatment of workers as individuals rather than part of a collective


workforce

• The encouragement of workers to consider management as ‘partners’


rather than as opponents – ‘us and us’, rather than ‘us and them’.

PRACTICE

Human resource management (HRM) as a business practice comprises several


processes, which used together are supposed to achieve the theoretical goals
mentioned above. These practical processes include:

• Workforce planning

• Recruitment (sometimes separated into attraction and selection)

• Induction and orientation

• Skills management

• Training and development

• Personnel administration

• Compensation in wage or salaries

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• Time management

• Travel management (sometimes assigned to accounting)

• Payroll (sometimes assigned to accounting)

• Employees benefits administration

• Personnel cost planning

• Performance appraisal.

ISSUES IN INTERNATIONAL (GLOBAL) HRM

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International human resource management involves a number of issues not
present when the activities of the firm or organization are confined to one
country. The issues in global HRM include:

• The variety of international organizational models that exist

• The extent to which HRM policy and practice should vary in different
countries. (This is also known as the issue of Convergence and
Divergence).

• The problem of managing people in different cultures and


environments

• The approaches used to select, deploy, develop and reward expatriates


who could be nationals of the parent company or ‘third-country
nationals’ (TCNs) – nationals of countries other than the parent
company who work abroad in subsidiaries of that organization.

CULTURAL DIVERSITY

Culture and environment diversity is a key issue in international human


resource management (HRM). In a study that become a classic in the study of
cultural differences, Hofstede (1980) investigated value differences between
over 11,000 employees in some 40 countries employed by International

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Business Machine (IBM). His study focused on the influence of national
culture on the sub-cultures of the worldwide organization.

4 key dimensions were identified.

1. Individualism versus Collectivism – i.e. where individualism is a


national cultural attribute that favours people looking to themselves and
their families as their first priority, and where collectivism is an
attribute that favours people giving their prime loyalty to, and finding
protection in, the wider group.

2. Power distance – i.e. the extent to which different cultures accept


different distributions of power within the society; High Power distance
society accepts wide differences of power between those at the top of
society and those at the bottom, while Low Power distance society sees
power as being shared much more equitably, leaving less of a power
gap between the top and the bottom ranks.

3. Uncertainty Avoidance – i.e. the extent to which a society is tolerant


of uncertainty and which therefore feels less need to avoid it (Low
Avoidance) or feels threatened by it (High Avoidance).

4. Masculinity versus Femininity – i.e. where a nation has a tendency to


prefer assertiveness and materialism (masculinity), or has a higher
concern for relationships and the welfare of others (femininity).

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Ouchi FROM Japan proposed what he called ‘Theory Z’ as opposed to
McGregor’s Theories X and Y as a means by which American companies
could imitate certain features of the Japanese approach to managing people.
He argued that American firms could make changes in the following areas of
human resource management:

• They could offer more secure employment prospects and better


prospects of a career

• They could extend employee participation in decision-making

• They could place greater reliance on team-spirit and on recognizing


the contribution of individuals to team effort

• They could encourage greater mutual respect between managers and


their staff.

Given the difficulties of developing careers in today’s’ business


organizations, where reducing the number of job levels, as well as minimizing
the number of jobs is commonplace, it seems unlikely that most international
organizations can offer their employees guarantees of long-term prospects.
However, some of these characteristics have adopted in many organizations
and indeed are regarded as ‘good’ or ‘best practices’.

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In view of the above, the ‘universalistic’ approach to HRM prevalent in the
USA is rejected in Europe where the basic functions of HRM are given
different weights between countries and are carried out differently. In
addition, the cultural differences mentioned above have produced the slogan
in international human resource management “Think GLOBALLY and act
LOCALLY”. This means that an international balancing act is required,
which leads to the fundamental assumption made by Bartlett and Ghoshal
that: ‘balancing the needs of co-ordination, control and autonomy and
maintaining the appropriate balance are critical to the success of the
multinational company’.

To achieve this balancing act, there are six capabilities that enable firms to
integrate and concentrate international activities and also separate and adopt
local activities:

• Being able to determine core activities and non-core activities;

• Achieving consistency while allowing flexibility;

• Building global brand equity while honouring local customs and laws;

• Obtaining leverage (bigger is better) while achieving focus (smaller is


better);

• Sharing learning and creating new knowledge;

• Engendering a global perspective while ensuring local accountability.

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FACTORS THAT INFLUENCE THE GLOBAL WORK
ENVIRONMENT :

CHOOSING AN APPROACH TO IHRM

• Corporate International Strategy

• Political and Legal Concerns

• Level of Development in Foreign Locations

• Technology and the Nature of the Product

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• Organizational Life Cycle

• Cultural Differences

Such healthy HR practices encourage the growth of the organization as


employees after all play a major role in the well-being of a company. Making
an employee feel like a million dollars pays in the form of the success of an
organization.

Top Ten HR Practices that can help you achieve your organizational goals
every year.
Summary of Practices:

• Safe, Healthy And Happy Workplace


• Open Book Management Style
• Performance Linked Bonuses
• 360-Degree Performance Management Feedback System
• Fair Evaluation System For Employees
• Knowledge Sharing
• Highlight Performers
• Open House Discussions And Feedback Mechanisms
• Reward Ceremonies
• Delight Employees With The Unexpected

Safe, Healthy and Happy Workplace:

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Creating a safe, healthy and happy workplace will ensure that your employees
feel homely and stay with your organization for a very long time. Capture
their pulse through employee surveys.

Open Book Management Style:

Sharing information about contracts, sales, new clients, management


objectives, company policies, employee personal data etc. ensures that the
employees are as enthusiastic about the business as the management. Through
this open book process you can gradually create a culture of participative
management and ignite the creative endeavor of your work force.. It involves
making people an interested party to your strategic decisions, thus aligning
them to your business objectives. Be as open as you can. It helps in building
trust & motivates employees. Employee self service portal, Manager on-line
etc. are the tools available today to the management to practice this style.

Performance linked Bonuses:

Paying out bonuses or having any kind of variable compensation plan can be
both an incentive and a disillusionment, based on how it is administered and
communicated. Bonus must be designed in such a way that people understand
that there is no payout unless the company hits a certain level of profitability.
Additional criteria could be the team's success and the individual's
performance. Never pay out bonus without measuring performance, unless it
is a statutory obligation.

360 Degree Performance Management Feedback System:

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This system, which solicits feedback from seniors (including the boss), peers
and subordinates has been increasingly embraced as the best of all available
methods for collecting performance feedback. Gone are the days of working
hard to impress only one person, now the opinions of all matter, especially if
you are in a leadership role (at any level). Every person in the team is
responsible for giving relevant, positive and constructive feedback. Such
systems also help in identifying leaders for higher level positions in the
organization. Senior managers could use this feed back for self development.

Fair Evaluation System for Employees :

Develop an evaluation system that clearly links individual performance to


corporate business goals and priorities. Each employee should have well
defined reporting relationships. Self rating as a part of evaluation process
empowers employees. Evaluation becomes fairer if it is based on the records
of periodic counseling & achievements of the employee, tracked over the
year. For higher objectivity, besides the immediate boss, each employee
should be screened by the next higher level (often called a Reviewer). Cross –
functional feed back, if obtained by the immediate boss from another manager
(for whom this employee's work is also important), will add to the fairness of
the system. Relative ratings of all subordinates reporting to the same manager
is another tool for fairness of evaluation. Normalisaion of evaluation is yet
another dimension of improving fairness.

Knowledge Sharing:

Adopt a systematic approach to ensure that knowledge management supports


strategy. Store knowledge in databases to provide greater access to

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information posted either by the company or the employees on the knowledge
portals of the company. When an employee returns after attending any
competencies or skills development program, sharing essential knowledge
with others could be made mandatory. Innovative ideas (implemented at the
work place) are good to be posted on these knowledge sharing platforms.
However, what to store & how to maintain a Knowledge base requires deep
thinking to avoid clutter.

Highlight performers:

Create profiles of top performers and make these visible through company
intranet, display boards etc. It will encourage others to put in their best,
thereby creating a competitive environment within the company. If a systems
approach is followed to shortlist high performers, you can surely avoid
disgruntlements.

Open house discussions and feedback mechanism:

Ideas rule the world. Great organizations recognize, nurture and execute great
ideas. Employees are the biggest source of ideas. The only thing that can stop
great ideas flooding your organization is the lack of an appropriate
mechanism to capture ideas. Open house discussions, employee-management
meets, suggestion boxes and ideas capture tools such as Critical Incidents
diaries are the building blocks that can help the Managers to identify &
develop talent.

Reward Ceremonies:

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Merely recognizing talent does not work, you need to couple it with
ceremonies where recognition is broadcast. Looking at the Dollar Check is
often less significant than listening to the thunderous applause by colleagues
in a public forum.

Delight Employees with the Unexpected:

The last but not least way is to occasionally delight your employees with
unexpected things that may come in the form of a reward, a gift or a well-
done certificate. Reward not only the top performers but also a few others
who are in need of motivation to exhibit their potential.

CONCLUSION

Global human resource management provides an organized framework for


developing and managing people who are comfortable with the strategic and
operational paradoxes embedded in global or international organizations and
who are capable of managing cultural diversity. Because of cultural
diversities and issues of convergence and divergence, it is impractical to
develop a truly international approach to global human resource management.
This means that organization structures, management styles, organization
cultures and change management programmes have to be adapted to the
dominant cultural attributes of the host nation just as a careful balancing act is
sought between being global and local needs.

REFERENCES

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Armstrong, Michael (2006), A Handbook of Human Resource Management
Practice, Kogan Page Limited.

Bartlett, C.A. and Ghoshal, S. (1991), Managing Across Borders; The


Transnational solution, London Business School, London.

Cole, G. A. (2002), Personnel and Human Resource Management, Thompson


Learning, London.

Hofstede, G. (1980), Culture’s Consequences: International Differences in


Work-related Values, Sage Publications.

Oded Shenkar (1995), Global Perspectives of Human Resource Management.


Englewood Cliffs, NJ: Prentice Hall.

Ouchi, W. (1981), Theory Z: How American Business can meet the Japanese
Challenge, Addison Wesley.

S. K. Bhatia (2005), International Human Resource Management: A Global


Perspective: Practices and Strategies for Competitive Success. New Delhi,
Deep and Deep.

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