Globalization of Human Resource Management Practice

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Introduction

In the past few decades, the significance of human resource management (HRM) in an international context has been gaining momentum. Researchers, including Fan et al (2016), Farndale et al (2017), and Kaufman (2016) have shown increased interest in the field and studied how HRM practices are changing globally. It is imperative for international human resource management (IHRM) to incorporate local and national practices and matters because they encompass numerous policies and best practices and the constraints associated with their implementation. Rowley & Benson (2002) and Budhwar et al. (2016) argue that in the coming years, IHRM will morph into a simple concept because factors such as globalization, the utilization of best practices, and benchmarking are initiating its convergence. Mayrhofer et al (2011) criticize the idea of universalism because new developments in HRM might not be unidirectional, thereby, leading to more divergence. Their study found that there was no final HRM practices convergence in the 13 European countries evaluated between 1992 and 2004.

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Convergent and Divergent HRM

The convergence of HRM in the international arena could be caused by several factors: globalization, technological advancements, and international trade and finance. These factors could compel organizations to standardize their policies and practices to fit international standards. However, this could be challenged by the customs and practices of local organizations, which could lead to more divergence.

Convergence

According to the convergence theory, the process of industrialization and the proliferation of advanced technologies would promote the convergence of HRM as countries would adopt United States’ political and economic systems. This theory is based on the argument that such systems are founded on key basic principles that can be applied in HRM (Rowley & Benson, 2002). The principle of “scientific management’ assumed that there is only one effective way of executing management (Rowley & Benson, 2002). These views have been criticized by Howard (2006), because of their oversimplification of industrialization and its impact, and their overreliance on the global influence of technology. According to Rowley and Benson (2002), the forces that drive the convergence of HRM will overpower the differences that exist at the national levels. The idea of convergence is founded on the belief that unless organizations adopt certain HRM best practices, then they will not be able to compete effectively with other organizations (Rowley & Benson, 2002). Proponents of the convergence of HRM argue that the benefits gained from implementing best practices are not limited to individual firms; they are universal and any organization can enjoy them by implementing the practices. These sentiments have been augmented by the emergence and proliferation of global communications, regional economic integration, international travel, international trade, and internationalization.

It is believed that political, socioeconomic, and technological forces that operate in a country usually conform to practices that are common in developed countries. However, these arguments are debated strongly because they are based on the assumption that all corporations operate and compete in a similar manner. Contingency theory postulates that differences in technology and unstable environments compel organizations to adopt different HRM practices that suit their needs (Rowley & Benson, 2002). However, the theory on the convergence of HRM suggests that there is a “best practice’ that could work for all organizations, regardless of the existence of variables. These arguments are criticized because they ignore how management practices and principles vary from country to country. A study conducted by Mayrhofer et al. (2011) uncovered evidence of directional similarity (convergence toward similar directions) in practices in 13 European countries. The researchers sought to find out how aspects of HRM configuration (recruitment and selection, labor relations, training and development, workforce expansion, and compensation) and HRM practices (professional development, employee rewards, and employee communications) changed over time. Convergence was observed in various HRM practices including employee rewards and communications, even though a final convergence regarding HRM practices and HRM configurations was nonexistent (Mayrhofer et al., 2011). Convergence was also observed in core HRM practices involving recruitment and selection, compensation and benefits, as well as training and development.

Microsoft is an MNC whose HRM best practices support the idea of convergence. Its practices regarding recruitment and selection, employee training and development, workplace diversity, employee retention, and corporate culture are similar in all the countries in which it operates (Chakraborty, 2010). For example, rewards include free healthcare services, flexible working hours, and stock options. Recruitment and selection are conducted mainly in Ivy League schools such as MIT and Harvard. Training and development include 45 hours of paid online classes annually, and they include technical education seminars, certification programs, and management courses. Best practices common to MNCs include self-managed teams, employment security, selective hiring, extensive training, sharing information, and pay linked to company performance. For example, at Cathay Pacific Airways, performance is enhanced by monitoring employee behavior (Howard, 2006). Employees are admonished to take responsibility, comply with company values, and make individual decisions. Workers have the freedom to align their contributions with organizational goals and attain goals without being micromanaged (Howard, 2006). The corporation empowers employees by encouraging them to create individual objectives and competencies. This performance management approach is similar to Microsoft’s corporate culture which is founded on core values that include openness and respect, accountability for commitments, integrity, and honesty, and personal excellence and self-improvement.

Divergence

According to Rowley and Benson (2002), the operations of organizations are based on the values and norms that constitute their different corporate cultures. Therefore, it is impossible to create a set of values that will be applicable to all organizations. Moreover, the diversity observed in organizations and management means that each organization has to develop unique strategies to address its problems. Divergence of HRM is promoted by the diversity of cultural value alignments, variations in capitalistic systems, differences in legal set-ups, and dissimilar national business systems (Budhwar et al., 2016). Institutional context is an important concept in the understanding of the divergence of HRM. Organizations adopt different practices, and the existence of similarities between the results of the less successful mimic the practices of the more successful one (Farndale et al., 2017). Many corporations operate within the context of the country or region in which they are located. In that regard, they are subservient to the local rules, regulations, and traditions that govern business practices (Farndale et al., 2017). Comparative capitalism suggests that the divergence of HRM will be the norm because of the differences that exist between business environments in various countries. Convergence of HRM is difficult to attain because each corporation must adapt to its environment, which is unique in its own way. The cultures and institutions found in each country are unique (Kaufman, 2016). Therefore, you would expect to find different business practices in each country.

Conclusion

Cultural differences and business norms create divergence as each corporation tries to handle its problems in a unique way. Divergence of HRM is promoted by the diversity of cultural value alignments, variations in capitalistic systems, differences in legal set-ups, and dissimilar national business systems. Internationally, many MNCs have adopted similar HRM practices in how they conduct practices such as recruitment and selection, employee training and development, workplace diversity, and employee retention. Convergence in HR policy and practice will occur in core HRM areas such as recruitment and selection, employee training and development, employee retention, and rewards.

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References

Budhwar, P. S., Varma, A., & Patel, C. (2016). Convergence-divergence of HRM in the Asia-Pacific: Context-specific analysis and future research agenda. Elsevier.

Chakraborty, B. (2010). Microsoft Corporation: best practices in human resource management. ICMR Center for Management Research.

Fan, D., Xia, J., Zhang, M. M., Zhu, C. J., & Li, Z. (2016). The paths of managing international human resources of emerging market multinationals: Reconciling strategic goal and control means. Human Resource Management Review, 26(1), 298-310. Web.

Farndale, E., Brewster, C., Ligthart, P., & Poutsma, E. (2017). The effects of market economy and foreign MNE subsidiaries on the convergence and divergence of HRM. Journal of International Business Studies, 48(9), 1065-1086. Web.

Howard, C. (2006). An integrated approach to performance management. Bersin & Associates.

Kaufman, B. E. (2016). Globalization and convergence-divergence of HRM across nations: New measures, explanatory theory, and non-standard predictions from bringing in economics. Human Resource Management Review, 26, (1), 338-351. Web.

Mayrhofer, W., Brewster, C., Morley, M. J., & Ledolter, J. (2011). Hearing a different drummer? Convergence of human resource management in Europe-A longitudinal analysis. Human Resource management Review 21(1), 50-67. Web.

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Rowley, C., & Benson, J. (2002). Convergence and divergence in Asian human resource management. California Management Review, 44(2), 90-109.

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