Issues in international HRM

Issues in international HRM

The issues that affect the practice of international as distinct from domestic HRM are the impact of globalization, the influence of environmental and cultural differences, the extent to which HRM policy and practice should vary in different countries (convergence or divergence), and the approaches to employ and manage expatriates.

 Globalizationis a term used to describe how trade and technology have made the world into a more connected and interdependent place. Globalization also captures in its scope the economic and social changes that have come about as a result.

Globalization is the process of international economic integration in worldwide markets. It involves the development of single international markets for goods or services accompanied by an accelerated growth in world trade

Any company that has economic interests or activities extending across a number of international boundaries is a global company. This involves some

issues not present when the activities of the firm are confined to one country.

Globalization requires organizations: to move people, ideas, products, and information around the world to meet local needs. They must add new and important ingredients to the mix when making strategy: volatile political situations, contentious global trade issues, fluctuating exchange rates, and unfamiliar cultures. They must be more literate in the ways of international customers, commerce and competition than ever before. In short, globalization requires that organizations increase their ability to learn and collaborate and

to manage diversity, complexity, and ambiguity

Global and international HRM

The following distinction was made by Brewster et al (2005: 966) between global and international RM: Traditionally, international HR has been about managing an international workforce – the higher level organizational people working as expatriate , frequent commuters, cross-cultural team members and specialists involved in international knowledge transfer. Global HRM is not simply about these staff. It concerns managing all HRM activities, wherever they are, through the application of

global rule sets.

Environmental differences

Environmental differences between countries have to be taken into account in managing globally As described by Gerhart and Fang (2005: 971) these include ‘differences in the centrality of markets, institutions, regulation, collective bargaining and labor -force characteristics’. For example, in Western Europe collective bargaining coverage is much higher than in countries like the United States, and Japan. Works councils are mandated by law in Western European countries like Germany, but not in Japan or the United States. In China, Eastern Europe and Mexico, labor costs are significantly lower than in Western Europe, Japan the United States.

Cultural differences

Cultural differences must also be taken into account. Hiltrop (1995) noted the following HR areas that may be affected by national culture:

●● decisions on what makes an effective manager;

●● giving face-to-face feedback;

●● readiness to accept international assignments;

●● pay systems and different concepts of social justice;

●● approaches to organizational structuring and strategic dynamics.

The significance of cultural differences was the message delivered by Hofstede (1980) based on his research using worldwide data on IBM employees. He suggested that culture consisted of collective values and involved the collective mental programming of people in an environment and broad tendencies ‘to prefer certain states of affairs over others’ (ibid: 19). One of the conclusions Hofstede reached was that the cultural values within a nation are substantially more similar than the values of individuals from different nations.

This has been taken up by subsequent commentators such as Adler (2002) who claimed that Hofstede’s study explained 50 per cent of the difference between countries in employees’ attitudes and behaviors

Convergence and divergence

According to Brewster et al (2002), the effectiveness of global HRM depends on the ability to judge the extent to which an organization should implement similar practices across the world (convergence) or adapt them to suit local conditions (divergence). The dilemma facing all multinational corporations is that of achieving a balance between international consistency and local autonomy. But Perkins and Shortland (2006) noted that strategic choices on employment relationships may be influenced primarily by ‘home country’ values

and practices.

References

Adler, N J (2002) International Dimensions of Organizational Behaviour, Cincinnati, OH,

South-Western

 

Bartlett, C A and Ghoshal, S (1991) Managing Across

Borders: The transnational solution, London, London Business School

Bradley, P, Hendry, C and Perkins, P (1999) Global or multi-local? The significance of international values in reward strategy, in (eds) C Brewster and

H Harris, International HRM: Contemporary issues in Europe, London, Routledge

Brewster, C (2004) European perspectives of human resource management, Human 

Resource Management Review, 14 (4), pp 365–82

Brewster, C and Sparrow, P (2007) Advances in technology inspire a fresh approach to international HRM, People Management, 8 February, p 48

Brewster, C, Harris, H and Sparrow, P (2002)

Globalizing HR, London, CIPD

Brewster, C, Sparrow, P and Harris, H (2005) Towards a new model of globalizing HRM,

The International Journal of Human Resource Management, 16 (6), pp 949–70

Gerhart, B and Fang, M (2005) National culture and human resource management: assumptions and evidence, The International Journal of Human

Resource Management, 16 (6), pp 971–86

Harris, H and Brewster, C (1999) International human resource management: the European

contribution, in (eds) C Brewster and H Harris,

International HRM: Contemporary issues in Europe, London, Routledge