Human Resource Management in a Global Company

As the world moves forward into the 21st century, new environmental trends are exerting a profound impact on the patterns of global competition. To develop and manage a global organization implies developing and managing people who can think, lead and act from a global perspective with a ‘global mind’ as well as ‘global skills’.  The process of globalization requires a radical transformation about the role and tools of human resource management in multinational firms. The focus should be on issues of global leadership, cultural diversity in management, new organizational structure necessary for global competitiveness. Discussions should also emphasize on strategic alliances, global co-ordination and integration, and staffing and development processes.

My objective of writing this article is to answer some of the most critical questions regarding human resources in global firms. For example: what is the contribution of human resource activities to competitive strategies of a global firm? What is the value of cultural diversity and what are its costs? How can executives strike a proper balance between the needs of global businesses, those of the country affiliates and those of the whole corporation? How can they develop a multicultural top management group? What role should human resources play in the management of strategic alliances?

The globalization process is one through which firms achieve regional and global market differentiation while pushing forward with a rationalization of operations, selective geographic diversification, and far-reaching alliances that involve them in cooperative transnational networks and strategic groupings. Two key ideas permeate the understanding of global competitive strategies: diversity and complementary. Globalization implies accepting that cultural diversity in management composition and management style contribute to the competitive advantage of a global firm. This also requires pursuit of a number of management approaches which seem contradictory on paper, but can be truly effective if implemented simultaneously and with balanced application.

HRM in global firms can be explained in a number of contexts which I have mentioned below.

The Competitive Context:

Changes in contemporary global economy are in the background of many of the emerging challenges faced by HRM. Vast macro-societal changes increasingly bind countries into interdependent communities of nations in which goods, capital and people move freely; but between these remains a patchwork of regulatory and cultural barriers. To remain profitable in the new global age requires firms to commit themselves to becoming transnational and to internalize strategies likely to lead to success in global competition. Implementing successful global strategies then requires careful attention to the paradoxes created in design of corporate structures, the management of human resources, and the maintenance of multifaceted company cultures. The key to competitive advantage of a global firm is the ability to continuously transform itself, turn threats into opportunities, motivate people to excel not just survive, drive innovations to marketplace at a faster pace, and to operate globally through cross-cultural problem solving and team building. Three principle organizational capabilities as sources of sustainable competitive edge are:

·The creation of a competitive culture inside the global firm

·The existence of organizational learning systems based on accumulation of invisible assets

·A strong organizational emphasis on continuous improvement

These three capabilities are then linked with specific HRM, from staffing and development to organizational design.

The Strategic Context:

The main human resource management problems in global firms are in terms of dualities – organizational properties which seem contradictory or paradoxical, but are in fact complementary. The advantage of a transnational firm lies in its ability to cope with multidimensional and complex demands of the global business environment. Using the concept of cultural layering (building new capabilities into the organization’s culture while reinforcing its past cultural strengths) is an example of this.

Three techniques can be used to improve strategic coordination across various units of a global firm:

·Development of a clear, consistent corporate vision internalized by managers worldwide

·Use of training and career-path management to broaden individual perspectives and increase identification with corporate goals

·Co-opting all managers and organizational groups by inviting them to contribute to the corporate agenda and giving them direct responsibility for implementation

Hence global firms need to develop ‘balanced’ managers who have multifocal vision and who are sensitive to the demands of local responsiveness and opportunities for global integration.

The Cultural Context:

There is a distinct cultural influence on HRM in global firms. The ability to cope with cultural relativity is the key requirement for tomorrow’s global managers. The aspects of organization structure, leadership styles, motivation patterns, training and development modules and the very concept of ‘human resource’ management are culturally relative and therefore need to be reconsidered when national boundaries are crossed. To facilitate such cross-cultural adaptation, there should be more recruitment of top managers from different nationalities, acculturation through carefully planned career moves, and cultural awareness training. The challenge faced by the field of international HRM is as a puzzle located at the crossroad of national and organizational cultures. National and organizational cultural differences may hinder the acceptance of implementation of HRM policies, in particular on questions of selection and socialization, career planning and compensation etc. Therefore efforts should be directed towards the development of forward-looking international corporate cultures that could provide the framework for solving these vital issues in international HRM.

The Developmental Context:

Development of executives with a global mindset is one of the key strategic tasks faced by HRM in multinational firms. Among various desirable traits and skills, emphasis should be given on cultural empathy and adaptability. A number of approaches should be considered to selection, management development, and organizational structure that promote the necessary cross-cultural capabilities. Methods should be advocated that future top executives in global firms should have the opportunity for early cross-cultural experience through assignments in different countries.

Successful development of future leaders of global corporations requires a radical transformation of thinking about the basic premises of HRM development techniques. Five characteristics of global leaders are:

·A global mindset

·Global leadership skills

·An ability to lead cross-cultural teams

·Energy and talent to participate in global networking

·Skills as a global change agent

Traditional T&D falls short of the mark of what is required for globalization and efforts should now be taken to make management development as an integral part of global transformation process by linking compressed action learning with company’s competitive strategies.

The Collaborative Context:

Joint ventures, licensing agreements, project-based cooperative networks, and franchises are becoming commonplace arrangements for implementing strategy in global markets. There are six critical HR M issues which apply to each of these four types of cooperative ventures:

·Assignment of managers to cooperative ventures

·The human resource transferability issues

·Managers’ concentration on operating versus strategic issues

·The human resource competency issues (i.e. avoiding biases)

·Loyalty issues

·Career planning issues

Such capabilities are particularly important when firms are engaged in alliances that involve competitive collaborations-cooperative relationships with their existing and potential competitors. Cooperative ventures must be seen as a vehicle to produce not only financial rewards, but also managerial capabilities that can be used later on in other strategic settings. Organizational learning is the critical strategic task for HR managers in MNCs. They must be able to list the key obstacles to organizational learning in international strategic alliances, and discuss the agenda for transforming the specific components of the HR system, from selection and development to appraisal and compensation practices, to support the organizational learning process.

The Comparative Context:

In spite of globalization, nearly all MNCs remain embedded in their respective cultural spheres, in particular those in the United States and Japan. It is therefore important to assess specific globalization issues in their distinct comparative framework. Over the last few decades, US managers working abroad as expatriates have decreased. It shows Americans have difficulty in adapting to overseas assignments. As international experience is becoming a condition for ascent to top executive jobs, this would mean many Americans would miss out this competition.

Japanese MNCs face a different set of difficulties. They need a massive reorientation of their management structures and processes in order to redefine the basic role and responsibilities of their foreign operations and to restructure the relationship with the parent organization. A three stage program is recommended for this purpose:

1.Resources should be transferred

2.Local knowledge, skills and expertise must be developed

3.Responsibilities delegated to local subsidiaries can be expanded

A new style of HRM – Creative HRM – must be adopted to foster the self-renewal of firms whose production-oriented paradigms and traditional personnel systems may be incongruent with today’s fiercely competitive global environment. The new style of management is based on:

·Creation of a strategic vision in the firm with active employee participation and commitment

·Emphasis on the role of middle managers in the self-renewal process through a new ‘middle-up-down’ management style

·Transformation of career development, appraisal, reward, and staffing systems to support a multidimensional personnel management program that recognizes the individual as a source of creativity.

Global HRM for the years ahead:

Whatever innovations are being conceived today must be embraced and advanced by the next generation of managers and academics. Now is the time for us to develop an intellectual and managerial agenda that will satisfy the needs of global organizations. The start should be done academically by introducing an innovative program for teaching, research and managerial practices in B-Schools. A novel and fluid paradigm of MBA education must be redesigned in the global environment. There should be a common interface for interaction between practitioners (managers) and researchers (academics). Effective global HRM is the only most powerful tool or competitive weapon in today’s times of changing economy, globalization rules and demand.

We have to remove the competitive handicap of parochialism. The very dynamism of globalization process will continue to recast the spectrum of critical issues that may influence how people are managed in global firms.

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *