There has been a rapid pace of internationalization and globalization over the last decade.Expanding business operations beyond national boundaries while continuing commitment to local markets requires more complex business structures. One of the most critical determinants of an organization's success in global ventures is the effective management of its human resources. Globalization symbolizes the structural making of the world characterized by the free flow of technology and human resources across national boundaries presenting an ever-changing and competitive business environment. A vital aspect of globalization is the way diverse challenges are being faced by nations in an increasingly inter dependent world. The question arises here is- Why have Human Resource considerations become so important in International Business Management?
The environments within which international business is carried out in the first
Decade of the new millennium is increasingly competitive. The technological environment is such that technology supremacy is fleeting and since it does not last long, it cannot be considered a strong advantage of a company. The economic environment is effected by too many uncontrollable factors which mean a stable economic situation is less certain. The economy can be affected negatively by things which large companies and federal governments have no control over. The political environment responds to the socio-cultural environment - which in many countries, is undergoing the stresses of large immigration movements and cultural and religious frictions. Very few regions of the world are free of conflict so no place has a distinctively advantageous political environment. The geographic environment, long affected by rampant pollution, deforestation, greenhouses gases from autos and factories, acid rain from coal fired generators, declining water reserves etc. etc. has seen a bit of Mother Nature fighting back in 2003-2005 with some spectacular events such as a massive tidal wave, numerous destructive tornadoes, larger and more frequent hurricanes, volcanoes, mudslides, sandstorms, drought and crop failures and so on. As a consequence of the changes to and changes by the geographic environment, almost every place on the planet has had to endure weather that has negatively affected business and agricultural productivity.
HRM ISSUES AND CHALLENGES IN GLOBAL MARKETS
The coming of the 21 century poses distinctive HRM challenges to business especially those operating across national boundaries as multinational or global enterprise. Competing in global markets entail many factors and centralization of its human resource practices is certainly vital to improve global competitiveness and empower employees for global assignments. To achieve success in global marketplace, the challenge of all businesses regardless of their size is to understand global corporate cultural differences and invest in human resources. There are certain human resource management issues that are particular for the global enterprise. The key issues involve staffing policies selecting and retaining talented employee, training and development whilst encouraging employees to be innovative and creative, culture barriers, and legal frame work. Others issues include understanding the challenges of living and working overseas, performance appraisals from a distance, training and management development, compensation packages, and labor relations and organized labor laws. The way in which it can extend its basic mission of "getting the right people into the right places at the right times" and contribute to resolving the conflicting pressures within the corporation of centralization and decentralization and at same time Foster teamwork and learning within the transnational, and in developing a competitive culture.
Global Human Resource Management is a process concerned broadly with recruiting of persons, training them and putting them to the most productive usage. It is also concerned with maintaining of congenial international industrial relations. It is the essential prerequisite for the success of the international firm owning to its complexities.
- Global human resource management (GHRM) is the planning, selection, training, employment, and evaluation of employees for global operations.
- GHR managers serve in an advisory or support role to line managers by providing guidelines, searching, training, and evaluating employees.
- How a firm recruits, trains, and places skilled personnel in its worldwide value chains sets it apart from competition. The combined knowledge, skills, and experiences of employees are distinctive and provide myriad advantages to the firm's operations worldwide.
- Four major tasks of HRM
- Staffing policy
- Management training and development
- Performance appraisal
- Compensation policy
- Strategic role: HRM policies should be congruent with the firm's strategy and its formal and informal structure and controls
- Task complicated by profound differences between countries in labor markets, culture, legal, and economic systems
International management encounters many problems above those faced by a domestic organization. Geographic distance and a lack of close, day-to-day relationships with headquarters represent a major challenge to multinationals. "It is essential, therefore, that special attention is given to the staffing practices of overseas units" (Pigors 1973: 690).
According to Pigors (1973: 690) there are three different sources of employees with whom an international company can be staffed. First, the company can send employees from its home country, which is referred to as expatriates, expats or home country nationals. Second, it can recruit host country nationals (natives of the host country), and third, it can hire third country nationals who are natives of a country other than the home country or the host country.
When international expansion of the company is in its infancy, management is heavily relying on local staff, as it is extremely respondent to local customs and concerns.“As the company's international presence grows, home-country managers are frequently expatriated to stabilize operational activities (particularly in less developed countries). At later stages of internationalization, different companies use different staffing strategies; however, most employ some combination of host-country, home-country, and third-country nationals in the top management team”
Types of Staffing Policy:
- Ethnocentric Policy
- Key management positions filled by parent-country nationals
- Best suited to international businesses
- Overcomes lack of qualified managers in host nation
- Unified culture
- Helps transfer core competencies
- Produces resentment in host country
- Can lead to cultural myopia
- Polycentric Policy
- Host-country nationals manage subsidiaries
- Parent company nationals hold key headquarter positions
- Best suited to multi-domestic businesses