Executive Summary
Human resource management is a vital aspect for any organization and must be managed effectively. Organizations that have decided to internationalize their operations must depict a high level of human resource management practice in order to be successful, considering several aspects. These aspects include the legal, ethical as well as the cultural issues in foreign markets. It is a noble thing to venture into foreign markets as this course of action results to considerable amount of benefits.
This article is ideal for any organization intending to go international and as such, a human resource manager will be provided with plentiful of viable information on how to effectively manage the human resources of his company.
Introduction
Regardless of whether operating within a certain geographic location or internationally, human resource management is an essential part of an organization. According to scholars, Human resource is as a set of individuals who together constitute the workforce of an economy. Contemporary scholars extend this definition to include the workforce in institutions and business sectors. Human resource management involves a variety of aspects. However, the most important and widely acknowledged aspect is the employees (Chew & Sharma 2005). With reference to the vision of a company, it is believed that the employees exist as vital assets to a company and as such, their value is usually enhanced by the development.
This follows that most companies, if not all, engage themselves extensively in practices concerning human resource management in an effort towards capitalization of its employees. The human resource governance is usually based on three trends which include; Demographics, that is, the attributes of the workforce; Diversity, that is, the variation that exist amongst a group of employees; and skills as well as qualifications, that is, the level of intellectual handling of an industry grows with the passage of time and so does the need for adequately skilled and proficient graduates (Chew & Sharma 2005). Glades and sons Limited is a composite picture of a cloth manufacturing company in Australia and as such, it is prominent for delivering quality, affordability as well as unique fashions to its customers.
The organization is a large company as it entails all aspects of a typical national level organization. In addition to this, it has put in place an excellent human resource structure and as such, its human resource operations are effective. This is the stronghold of this company and as such, it has resulted to winning of awards as the best company in Australia that acknowledges and treats its employees the best way possible. Currently, the management of the enterprise held a meeting and came up with a decision that the company should go global (Hendry 2004).
Thesis Statement
With reference to the Glades and sons, this paper is intended to analyze critically the human resource issues that are relevant to an organization intending to internationalize its operations.
Discussion
Rationale for expansion of the home country to another country
Glades and sons’ management made an essential and excellent decision to enter into foreign markets, that is, into the United Arab Emirates. As such, several benefits come with international markets. These benefits are discussed below.
New Pastures
Primarily, a company would wish to enter into foreign markets in an effort towards expanding its sales and thereby increasing the profits. This is the same aspect with regard to market saturation (Chew & Sharma 2005). Glades and sons can be regarded as a business model, which has been operating successfully and as such, it can be said to have effectively hit the saturation point in the market it operates within, that is Australia. Therefore, to continue increasing its revenues, the only option is to venture into the global market. If the management did not come with this vital decision, continued operation within the local market would have left the company stagnating and therefore incapable of fighting off competition (Westhuizena, Pacheco & Webbera 2012).
Geographical Vagaries
Glades and sons is located in Australia, a region where there is plentiful of clothe manufacturers and as such, the only business rationale with regard to the existence of clothes production is to export the clothes to other parts other than Australia, for instance to Asia, especially the United Arab Emirate states, among other regions (Harzing & Pinnington 2010). The findings of many researches conducted with regard to global markets have indeed stated that, through vagaries of location of resource, it maybe that it will be favorable for an organization to produce their products and sell it in foreign markets where the demand for those products is high.
Testing
“At times, it is essential that a firm enter into foreign markets in order to test or even improve the performance of the company within the market” (Westhuizena, Pacheco & Webbera 2012). If it follows that the company find that internationalized business operations has no immediate positive effects on its revenues or returns, the company can act with regard to the responses and thereby developing as well as improving, not only its products and services but also its strategies. In addition to this, by entering into foreign markets where the industry is strong as well as highly competitive, an organization is able to equip itself in order to enter into markets that are neither saturated nor competitive, putting the future into consideration.
Transformation of Demographics and conditions
As Australia develops, the demographics also become subject to change. The same case applies to the conditions of trade within Australia. It may be that, in the past, there existed some conditions, which made trading within a specified country favorable, but with the passage of time, due to developments, these conditions become unfavorable to trade in that country, but in United Arab Emirates, the changed conditions might be beneficial to their trade (Westhuizena, Pacheco & Webbera 2012).
Equity Competitiveness
Sometimes, a company may enter into a foreign market after a stiff competitor decides to enter into the same. In such instances, on seeing its competitor internationalize its operations, a company may see as surrendering the new market territory to the competitor. This therefore necessitates entering into foreign markets to try outdoing the competitor (Smith 2002).
Differences in national culture of the parent country and the host country
Culture can be described as the aggregate of beliefs, institutions, artifacts as well as techniques, which attributes human populations in a given area. In the world, each country exhibit unique and differentiated culture and as such, an organization that decides to internationalize its operations may find another country’s culture as an opportunity or even an obstacle to its human resource management practices. Differences in cultures, according to researches, usually have tremendous impact on international life, especially to globalized businesses (Westhuizena, Pacheco & Webbera 2012).
According to several researchers, it is evident that country based elements tend to cause a substantial impact on global business human resource management practices. Among the cultural factors are; attributes of the labor market, economic environment, political and legal environments, historical environment and attributes of both workforce as well as the society among other factors (Festing, Peter & Engle 2008).
Implications for the Human Resource Management
Research on the local culture
Commonly, culture is said to not only shape but also influences the human resource practices whenever a business decides to establish itself internationally. According to a research conducted by Smith (2002, p. 87), it was found out that the majority of internationalized firms employs more individuals from other countries than it does from their own countries. This implies that the managers concerned with the management of the human resource must entail scrupulous correctness with regard to the way they approach the aspect of staffing.
In addition to this, they ought to ensure that they give everyone, regardless of the culture or background, a consideration while working with them (Briscoe, Schuler & Claus 2008). In most cases, this may seem as a taxing task for the managers. However, this exercise maybe greatly facilitated if the expatriate employees work hand in hand with the international manager concerned with the human resource practices and as such, they are assisted in understanding each other. The business system must be blended together with the available expatriation policies. According to Banfield & Kay (2008, p. 43), most internationalized organizations tend to imprint themselves with the culture as well as traditions prevailing in their home countries. This is mostly seen within the area of human resource management (Banfield & Kay 2008).
Integration of Human resource management systems
In most instances, when integration is not adequately done, it follows that the management of various practices of human resource management becomes difficult and as such, a load of problems arise out of this poor integration. Globalization of organizations calls for standardization of some aspects of human resource management in an effort towards ensuring a continued pressure for divergence. The approach top this process is usually encompassed with complexity. In order to address this, the human resource manager ought to prioritize the need for looking at the prevailing culture, laws as well as the rules of the country in question (Festing, Peter & Engle 2008).
Where a parent company has extensively established human resource practices at home, it is usually assumed that it can transfer or adopt those policies in host countries without experiencing resource constraints, which have been imposed by the set conditions in host countries, is entirely wrong. According to Festing, Peter & Engle (2008, p. 67), the human resource management practices as well as policies of an organization that has been internalized must blend human resource management system with the factors prevailing within the host country as well as the specific factors of the organization.
Implications of national culture, legal and ethical considerations on recruitment selection and compensation
Human resource management practices entail several functions, which include recruitment and selection, as well as compensation of which, the national culture, legal as well as ethical considerations have an implication on them especially in the case where an organization intends to go international. To understand this notion better, it is necessary to define the terms recruitment and selection as well as compensation.
Recruitment and selection; these are the main functions of any human resource management practice. They are strongly bonded together by the human resource’s employment practice. During the employment process, the phase that comes first is the recruitment phase and as such, it is where the applicant makes a representation of his skills, knowledge as well as his qualifications and thereby becoming a candidate. Right after recruitment, selection takes charge. By becoming a candidate, it means that an applicant has all the desirable and necessary skills and as such, he is scheduled for an interview and upon convincing the interviewing panel, the applicant is selected and thereby undergoing rigorous training as well as training and development (Briscoe, Schuler & Claus 2008).
Compensation; With regard to human resource terms, compensation can be defined as the aggregate pay that an employee should get from an employer for the work legally and sufficiently executed within the terms and conditions of the employer. Usually, compensation comes in the form of money or non-monetary terms (Williams, Rayner & Allinson 2012).
Recruitment and Selection
In any organization, selection of expatriates forms a crucial part of human resource management practice. The main reason behind this is that, an organization may have established the most efficient systems but occupied by the wrong individuals. The manager mandated with the responsibility of managing the human resource ought to establish effectively all the relevant as well as the desired skills and thereby identifying the best person for a certain position. This must be done although, in most cases, the search for the ideal person, who can be said to be capable and has the will to go and work overseas, is an almost impossibility. For instance, while identifying as well as the selecting of female expatriates, the human resource manager ought to put this based on the technical competence that has been demonstrated as well as the desirable personality attributes, which includes flexibility as well as openness (Suutari & Tornikoski 2001).
Compensation
In an internationalized organization, the workforce comes from diverse backgrounds. In addition to this, these workforces entail different experiences and as such, the task of managing them becomes complex, a complete contrast if the workforce came from the same country. Where internationalized companies decided to standardize the compensation, it would follow that serious problems arise amongst workforce in different parts of the world, who do similar tasks (Briscoe, Schuler & Claus 2008). According to Harzing & Pinnington (2010, p. 56), a management may entail healthy intentions for the workforce but if a formula, which is well understood, verifiable and perceived as entailing fairness and equitability within the organization, has not been established, conflicts as well as hard feelings among employees are inevitable.
To the resource manager, this is an important point to note and as such, he must ensure that he establishes precise and clear terms as well as conditions with regard to differentiated compensation existing among similar positions within different regions or boundaries. The human resource manager must see that the workforce is given adequate information on the reasons for the differences in salary structures and as such, problems will not arise amongst the workforce at a future date. In a research conducted by Suutari & Tornikoski (2001, p. 392), it was reported that low levels of the aggregate compensation are the most predominant problem that expatriate human resource managers face. In addition to this, the researchers asserted that, in any international company, the information with regard to the living cost of any particular country in which an internationalized company operates within is usually limited.
In most cases, the aggregate compensation is said to be a major problem that the human resource faces whenever a company decides and start operating globally, especially a situation where the resource manager, after entering into foreign markets, realizes that the compensation that the organization offer does not entice the new workforce, just as it was in the home country. In their book, Williams, Rayner & Allinson (2012, p. 45) gives a suggestion that international compensation, as compared to any other human resource practice, consumes time massively. Moreover, he asserted that international compensation ought to be prioritized in international companies, as it is the most strategic human resource practice. Proper and sufficient implementation of compensation practice is a great benefit to an international company human resource manager as it assists in the smooth running of his functions. International companies that decide to move a human resource manager to another country and then move him back or replace the manager usually ends up incurring heavy costs, which is unnecessary (Suutari & Tornikoski 2001).
Recommendations and Conclusions for a successful expansion
When a company decides to internalize its operations, it is common that the human resource management practice will experience various differing aspects, that is, different from the domestic human resource aspects. Internationalized human resource management, as compared to domestic human resource, is entailed with complexities subsequent internationalized operations since there are a variety of issues that one needs to be aware of (Suutari & Tornikoski 2001). A human resource manager in international organizations ought to take into consideration several aspects when working within a multi-national business setting. Such aspects include the people’s culture, laws, pay expectations as well as the terms and conditions of work from local as well as expatriate staff. In addition to this, the integration of human resource practices as well as procedures al through the internationalized organization exists as aspects involved in internationalized business operations. It is essential that a human resource manager takes all this into consideration and as such, it results to the organization’s management having the most appealing working relationships with regard to the workforce within the organization while still getting superior performance attributes from them (Harzing & Pinnington 2010).
The way human resource manager play around with the human resources within an organization, whether internationalized or operating within a specific geographic region, usually has a significant impact with regard to the extent of success subjected to an organization. Some aspects entailed in human resource management may be considered minute and rendered insignificant. However, they may have the capabilities of influencing a magnitude of bearing on workforces and as such, there is a big likelihood that they will be different putting various countries into considerations. These differentiations, according to the analysis of the report, are largely attributable to the diversified people’s cultures, which show diversified wants as well as priorities.
Standardized compensation for employees in multi-national organizations is necessary. If this is not the case, in the future, serious problems will inevitably arise among the employees.
In most cases, human resource managers find the management of staffs pay packages in organizations, which have internalized their operations as an issue entailing a high level of complexity especially where the employees have different rates of earnings. However, the workforce in such organization is such that they are likely to experience high satisfaction levels with regard to the differentiated payment levels whenever they feel that they are being paid accordingly, that is, they are being paid according to their worth. This is largely the case where individuals, who are seconded to work outside their domestic boundaries, for a short time, are considered (Suutari & Tornikoski 2001).
The workforce working oversees bring sizable value and as such, they contribute greatly towards international success of an organization. The human resource ought to consider the nobility of this fact and as such, he should always keep it in mind during his decisions regarding the management of the most aspects of any organization, that is, the human resource.
Action Plan for Glades and Sons Limited expansion
The change of the nature of operations that Glades and Sons Limited seek is to expand and enter into foreign markets.
Action or change that will occur; Advertisements through international media, posters, displays as well as other information regarding the intended expansion to other countries. All these forms of advertisements will be changed in a regular manner as new information with regard to the intended new markets are unveiled.
Who will carry out the action plan: A subcommittee constituted of the managing director of Glades and Sons Limited, various country representatives to United Arab Emirates and other countries across the world, the human resource manager as well as the national marketing manager will be responsible for the dictation of what is passed through the media to the markets. The whole action-planning group will work towards establishing the sources of funds to make the international advertisements. The ambassadors will be held responsible for providing the information with regard to various markets of interest.
By when will it take place and how long will it take: The action-planning group will ensure that media dominantly air the advertisements within seven weeks upon the action step decision.
Resources needed to execute this step: The action-planning group will approach various financial institutions such as major banks as well as major micro financial institutions in an effort towards raising funds for the expansion program.
Communication in regards to the action step: Both the prospective as well as the actual stakeholders ought to top be provided with adequate information concerning the planned expansion to foreign markets.
References
Briscoe, D.R, Schuler, R.S & Claus, L. (2008), International Human Resource Management, Taylor & Francis, London.
Banfield, P & Kay, R (2008), Introduction to Human Resource Management. Oxford University Press, Oxford.
Chew, I.K & Sharma, B (2005), The effects of culture and HRM practices on firm performance, Empirical evidence from Singapore, vol. 6, no. 2, pp. 133-46. Web.
Festing, M, Peter, D & Engle, A.D. (2008), International Human Resource Management: Managing People in a Multinational, Cengage Learning EMEA, Hempshire.
Harzing, A & Pinnington, A (2010), International Human Resource Management, Springer, Belmont.
Hendry, C (2004), Human resource strategies for international growth, Taylor & Francis, London.
Suutari, V & Tornikoski, C (2002), The challenge of expatriate compensation: the Sources of satisfaction and dissatisfaction among expatriates, International Journal of HRM, 1 no. 3, pp. 389-404.
Smith, P.B (2002), Organisational Behavior and National Cultures, British Journal of Management, 3 no. 2, pp. 39-51.
Westhuizena, D, Pachecoa, G & Webbera, D.J (2012), Culture, participative decision making and job satisfaction. 4, no. 2, pp. 104-116, Web.
Williams, H.M, Rayner, J & Allinson, C.W (2012), New public management and organisational commitment in the public sector. testing a mediation model, vol. 26, no. 2, pp. 133-46. Web.