Both the national and global corporations are practicing ‘International Human resource Management (IHRM)’ in order to amplify the skills of employees and compare the capabilities of human resources of different countries. The IHRM is an approach that expresses the significance of human resources and imitates international corporate strategies of an explicit organization.
Common concept of human resource management illustrates how to adopt the right man for the right place. Both individual and organizational goals entail this process. This procedure also states all managerial decision-making and practices that directly or indirectly affect personnel of an organization. HR functions facilitate the most effective and efficient utilization of manpower.
Practice of IHRM involves in organizational performance factors, human resource planning, job analysis and work-study, recruitment and selection of HR, career transition, skill training and development, performance appraisal, wage and salary administration, employee benefits and labor relations. Nowadays, IHRM function is a significant part of the group of companies as the increase of multinational and global companies.
This paper focused on culture of multinational and global companies, treatment of culture as a significant inconsistent that sketch the IHRM strategies for multinational companies. This paper will also be integrated with relevant literature review, IHRM culture of India, China and Japan, USA and other western multinational companies and a conclusion.
Research objectives and questions
A brief analysis of recent trend in IHRM culture is the objective of this paper. All of the forces that affected the culture of an organization presented here both of literature and of practice in several countries. Traditional and recent practice of IHRM culture is also plotted here in a comparative form. To meet a common goal of an organization and an individual task of HR is to bring people and organization together. Essential forces that fosters the research objectives are as bellow:
- Policies- Trust, consensus, equity and openness construct HR policies,
- Motivation- Way of promote employees, so, that they could furnish better out put in their workings. In other words, make the working environment welcoming that personnel are enable to work with enthusiasm, efficiency and initiative and also feel winner always;
- Relations- A composition of fair treatment and constructive criticism would be made the working environment friendly and profitable relationship,
- Change agent– Considering the future uncertainties organizations need to welcome modern technologies and categorized the suspicions.
- Quality Consciousness– Success of an organization depends on ensure of the best quality in all aspects of the organization.
Recent trend of IHRM entails proper deployment of employees as resources, fair in rewarded, motivation where necessary and assemble the factors those would be proficient if the organization put into operation their goal as well as the individual.
As the requirement of this paper, a set of research questions has been integrated with the needs to incorporate the research objectives and to raise the questions those enable anyone to be aware of the motto of the paper are as follows:
- What is ‘culture’ and ‘national culture’?
- Why the cultural environment is an important variable moderating domestic and international HRM?
- How does culture influences the formation of international HRM strategies for multinational companies?
Literature review part of the paper, describes all of the research questions in a substantial form along with relevant example. A brief description of required topics are apprehended as bellow-
Culture and national culture: To understand human groups and societies culture is an imperative perception. Society of a country diverge one another through out its culture is the concept of national culture. On the other hand, the term culture stated as a complex outline of- assumptions, behaviors, metaphors, myths, stories and creative ideas that undeniably articulate an exacting society’s people. Culture is also taken care of as the heart of a society’s group of people.
Interaction among the people of a society prescribes how would be its organizational culture. For instance, because of the cultural differences both organizational structure and culture of USA and Saudi Arabia diverse from each other. In short, culture is the way that enables an organization transaction in its environment.
Concept of organizational culture describes the understanding and the sharing of the employees in configuration of- norms, attitudes, values and beliefs. A decided culture is cultivated by a set of organizations. In recent decades with the increase of women employees in the corporate world organizational culture has changed rapidly. Transformation of corporate values are enlightened in following tabular form:
| ||Have a preference of work |
Prefer money than work
Attentive in chain of command to conquer power
Try to develop consumer awareness
Choose use of the resources
Wish faster growth
Like better either family or the work
Whatever the individuality of an organization- domestic, multinational or global that has to arrange three basic aspects in its structure as the figure given bellow:
- Artifacts: Schein E. (1992), states that first level of organizational culture revealed that a detail form of culture should includes products, services and behavioral aspects of the employees in the organization.
- Espoused values: According to Schein E. (1992), the second level of organizational culture has sketched the ways that done work through others.
- Basic assumptions: Schein E. (1992) defines the third level of organizational culture as- the factors granted by the employees in the form of perception, beliefs, thoughts, and values and feeling those enable them to act.
In organizational culture, there also have significant term- “multiculturalism” for the people who worked together but originated from different background. Anthony, W. P., et al, (2005), argued that factors of multiculturalism include- gender, race, sexual orientation, ethnicity, physical ability, age limit, political correctness grounds the multiculturalism and also of the democracy. Kotter, P. J and associates (1992), studied on organizational culture more than 200 companies. Their group study evaluated that for all categories of there have two level of organizational culture presented in following figure:
Boost and strengthen organizational performance, organizational culture has a vital role in following aspects:
- Play a considerable role on long-term economic performance of an organization,
- It’s also sketch vision of a firm for a long-time and acts as a factor of failure and success,
- Even though a firm has abundant contribution of resources and skilled and efficient employees but apart from corporate culture long-term financial performance is exceptional.
- However, it is hard to change corporate culture emphasized on performance attraction.
For international companies, in 1993, Professor Taylor Cox’s, formulated a model named Cox’s model of six arguments heightens organizational performance though these issues sometimes have faced questions against their policies and procedures. A short description of this model is as below:
- The cost argument: Unless managing multiculturalism there come up anxiety of discrimination, racism, harassment etc rather than job practices and working place turn into uncomfortable. Leave of women and minor go away without any return against an organization’s investment. All of these are source of cost augment. Efficient supervision of multiculturalism could be save those unnecessary expenses and working time.
- The resource acquisition argument: A concept that identifies best working places for women and recruit efficient personnel under multiculturalism. With the support of this perception, an organization could get competitive advantages.
- Marketing argument: Companies that practice both multiculturalism and multinational operation most of time their target market is women and minor groups. These issues have a significant impact on buying goods and services.
- Creativity argument: Level of creativity would be developed through diversity perspective, recent approach of diversity management and not focus on the norms that getaway from the past. Recently a report publish that group of diverse culture are more bright and creative than a homogenous.
- Problem-solving argument: Decision making, problem solving, group potentiality, multidimensional perspective, behavioral awareness, profit evaluation, shared values and critical analysis are the issues that could make available to present different culture aggregately.
- System flexibility argument: System flexibility is the concept that evaluates quick response of an organization to its both internal and external environment. Multicultural model is a system that espouses fluidity rather than determinant and standardization. Enlargement of fluidity amplifies flexibility that is the advantage to react at lower cost when environmental changes occur.
Important cultural variable in domestic and international HRM
India is a country that combines 18 states along with 18 different languages and in case of USA, which has 50 states. Almost 150 million people live in China and their verbal communication needs 85 thousand alphabets to be written. All of these are considered as cultural factor both in home and abroad. For a domestic and multinational organization common and significant variables that moderate international HRM are circumstanced as follow:
- Taking charge of the culture: – Common attitude of different organization managers like to direct and take charge of their culture. Altering successful critical factors of culture is the outcome of top management leadership. Working in a group and connecting by culture is the organizer of vision.
- Education and sharing: In training session, employees are commenced the culture of the organization. Rules that must follow are also conveyed in both written and verbal form by mangers in words and action. These brought higher productivity and strong communication among employees.
- Gender issues: Gender diversity is another significant variable of organizational culture. Still now, there have also scores of barriers that proscribe equal opportunity in workplace though they have enough competencies rather than a male. Top position in an organization holds 97 % male and 0.5 % female respectively. A depressing point of gender issues – several unwanted sexual behavior by both verbal and physical in form of sexual harassment.
- Racial and ethnic minority issues: Race and ethnic is a significant dimension of international HRM. Cultural differences are stayed here at an extreme level. There have two common inequity areas under racism- earnings gap and recruit in top of a large organization though people of color have similar educational background and work competency. Revolving door syndrome is the concept of organization that states that discrimination free perception provides a little scope in workplace advancement and encourage starting own business.
- Age limit: Though there have retirement restriction but younger employees could not enjoy superior advantages that elder employees can. This tradition is mostly found in most of the Asian and in Middle East countries where junior employees have better competency than the senior employees are.
- Sexual orientation: With the beginning of 1990s, homosexual took place in workplace though most of the jurisdictions prohibit homosexual marriages. From 1987 many organization have started “homophobia” workshops to eliminate the fear of homosexual. Most of the top managers of USA attend such workshops.
- Diversity management: In simple form, managing multicultural in an organization is the concept of diversity management. Different background like- education, society and in case of multinational countries, national working in a common place is the requirement of diversity management. This form of multicultural exercise develops individual creativity, potentiality in decision-making and self-learning capability.
Impact on formation of international HRM strategies for multinational companies
- Organizational performance factors: Three broad forms of factors determine organizational performance. Performance factors are involved in- qualified people, organization, decision, professional development, planning, goal, classify employee efficiency, motivation, evaluation, rewarding, opportunity, both internal and external environmental challenges, strategy formulation.
- Human resource planning (HRP): Attain future organizational objectives HRP is the process that pursue employee development, strategy and business integration and merge management activities.
- Job analysis and work study: An investigating procedure that systematically evaluates skill, duties and responsibilities for a specific job using two methods- job description and job specification.
- Recruitment and selection of HR: A set of sequential steps are needed in choosing employees for predetermined job. Such steps are- filling vacancies from within the organization, filling vacancies from outside the organization along with the strategy- where, whom, how, why and recruitment job placement (RJP).
- Career transition: Orientation, promotion (either merit base or seniority base), demotion, separation (either layoff or termination) are the form of career transition. Among them orientation is the program of introducing employer and selected employees of the organization.
- Skill training and development: Job instruction training, job rotation, apprenticeship, and coaching, lecture and video presentation, vestibule training, role playing and the behavior modeling, simulization and self study and program language are outlined an organization’s skill training and development.
- Performance appraisal: A process to evaluate performance evaluation is the concept of performance appraisal. Under the global competitive market, it ensures the accountability of the employees as well as the employee performance. In this procedure HR department utilize database of the employees and took necessary decisions. For performance, appraisal procedure rating scale and checklist are the most applicable method.
- Wage and salary administration: Determining structure of the wage and salary job ranking, job rotation, factor of compensation and point system are used as traditional techniques. Recent few years factors of wage and salary administration- source of compensation data, pay level, compensation structure, strategic objective, prevailing wages and rate, union power, government constitution, comparable with and equal pay, international compensation and productive cost.
- Employee benefits: Considering three objectives- social, organizational and employee benefit either direct or indirect compensation. Both direct and indirect compensation include- incentive and gain sharing, pay for performance, compensation management, basic wages and salary, security, safety and health, benefit and services.
- Equal employment opportunity: Proscribe discrimination in the structure of race discrimination and harassment, pregnancy discrimination, sexual harassment, national origin discrimination and harassment, age discrimination and harassment, religious discrimination and handicap discrimination in workplace among-male, female, minor and disables. EEOC2 has developed at the beginning of 20th century.
In recent times, strategy of IHRM for recent multinational companies is more focused on diversity management and the glass ceiling. EEOC exploits numerous laws in order to rule out discriminatory aspects designate such as the equal pay Act of 1963, civil rights Act 1991, 1964, 1978 (amended), title VII of the civil rights Act, the pregnancy Act of 1978, the ADEA3 of 1967, the rehabilitation Act of 1973, the Americans with disabilities Act (ADA) of 1990 etc.
- Labor relations: Topical union relation turns into a pessimistic and broader form than before. To adopt strategy view of this aspect managers consider- based on the requirement of employees’ unionized employee-management relationship, evaluate how to keep a union excluding the impact on management and the way of bargaining for both in short dealing with unions of the employees by the authority.
- Total quality management (TQM) and productivity improvement: Strategy of total quality management and productivity improvement involves in- research and development (R & D), high quality and low cost, collaboration, leadership style, motivation, workplace diversity, leadership quality, cultural factors, restructuring the organization, downsizing, mergers and acquisition, joint ventures, globalization, evaluate productivity, modes of productivity development, ability and attitude.
- Ethics, employee rights and employer responsibility: From the view point of IHRM culture, ethics of an employee evaluated through- polygraph tests, personality tests, financial data and medical history testing and drug tests. On the other hand, employee rights are scrutinize, preserve through a set of strategic factors- management philosophy, rigidity of the labor markets and laws, union and employee power and to establish discipline and control structured an organizational culture.
Rights of an employee consist of- privacy, fair treatment, safety and security, collective bargaining power and communication and involvement in the organization. There is several employers’ responsibility against those employee rights. They are- stakeholder concept, ethics, familiar with the laws and practice of human dignity, communicate with employees and provide due process.
Culture at different countries from view of HRM
In the time of free trade and mixed economic system different region of the world’s manner of IHRM, culture diverse from each other because of their national culture. Present this diversity here incorporate IHRM culture of India, China, Japan, USA and the western multinational as bellow:
India: Recent IHRM culture of India is more focused on- managing the entire quality of the organization as required by ISO 9001 & ISO 9004 of 2000, practice of six-sigma, construct the organizational model following Shamrock, Federal and Triple I, accessibility of outsourcing HR, keep and grow existing manpower emphasize on enabling culture building and retention strategy for working out. An important side of Indian society is that they have four classes and treatment of these differs from each other.
China: China is the most populated country of the world and in recent years they try hard and soul utilizes almost all of their people. They produce prices based on the budget of consumer. In case of IHRM culture, their philosophy is to utilize their work force at cheap rate and turn them the biggest consumer market in the world.
Now China is considered as the “future” and at present their market is more attractive than USA, Japan, Western and European Union. Foreign multinational countries interest to invest in china because of their skilled, technological, cheap rate, power distance, uncertainty avoidance, product variety at diverse prices.
Though foreigner has to face language difficulties but get rid of this, there have a lot of opportunity and enrich cultural practice. Inter-personal relationship in workplace dominated through age of their manager, power, education and wealth.
Japan: Japan is famous in their qualities of product worldwide. Employees of the Japan are industrialist, punctual and have potentiality to invent varieties in product innovation. There have a tradition in workplace is that- employees of Japanese organization have the life time guarantee and follow merit base promotion rather than seniority.
USA: Common culture of US multinational companies hinge on four key areas published by Hudson Institutes report in 1987 named as “Workforce Report 2000”. This report pointed that there have several issues that construct and diverse organizational culture.
According to the “Workforce Report 2000” primary policies of US multinational companies are:
- With the world, economic growth arouses economic balance or equilibrium.
- For the service, industries enlarge efforts with the aim of large scale of production.
- Develop the environment that would be friendly for aging workforce and adaptability and flexibility.
- Make the working atmosphere conflict free between work and family especially for the women employees.
- Making the workplace easy and flexible for both the Hispanic American and African American, thus they could be able to have a meaningful involvement in national economy.
- Facilitate adequate training and development program for the employees.
Western multinationals: Labour market of western multinationals is highly expensive. But there have accountability of the employees, prior merit for promotion, transparency in operational activities, strictly follow the labour and commercial laws, total quality management (TQM), exercise six-sigma, fair in employee rights and practice of employer responsibility. A recent significant change in the western multinationals is that they alter their labour markets in China because of their potentiality in technology relocate.
Though there is present diversity in culture in different countries but in practice of IHRM, there are a set of common issues. These issues are articulate in a diverse approach according to the culture of the nation. Diversity of IHRM is illustrated in the paper in brief with necessary diagram. Brief form of IHRM includes concept of IHRM culture, importance variable of IHRM culture and strategic factors of IHRM culture for multinational companies. Practice of IHRM culture in different counties here considers- USA, China, Japan, Western multinational and India. Among them, exclude India and China exercise promotion in seniority base rather than merit.
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