Hrm in a globalized economy executive summary

Hrm in a globalized economy executive summaryThe say aims to discuss aspects of kind Resource vigilance in light of the ever changing trade familiarity base maintainn the globalisation of channeles today.Globalization has seen changes in the right smart businesses rifle and ar expected to deliver investor quantify. Companies started competing not just with local anaesthetic competitors tho with organizations crossways continents which forced companies to relook at continuously innovating and providing a unique value to its customers to retain them. Talent Sourcing and Talent Development within an organization create fabricate a science that identify and accept that diverse employee base cultivate the secondbone of a business and are responsible for contributing towards achievement of organizations global goals and directly impacting competitiveness and delivering that Investor value.Early in the 1800s during the times of Industrialization, the approach to managing custody was primitive task drive approach. Historically, Henry Fords assembly lines and Studies of Frederick Taylor such(prenominal) as the time and motion studies thought of improving productivity by putting employees in line with mechanics. They tried to boost productivity by designing the way work is carried out. They focussed purely on productivity since productivity was what gave profits and thitherfore competitive edge. manpower was put them in the same league as machines inviting organization conflict and distraction from the goal.As globalized environment changed the rules of the game, Organizations realized that employees and their talents is the single closely important supply of sustainable competitive advantage. Employees are the ones that deploy scarce resources optimally. To survive and to succeed, organization need to leverage its gracious resource capitals talents to develop stark naked products and services and creating value for customers. This marked change in emplacement of managements saw the emergence of concept of Global Human Resource oversight which characterizes implementation of effect policies to maximize objectives of organizational integrity, employee commitment, flexibility and quality at a global level.Global Human Resource Management hence becomes very important since globalisation and global operations bring with them challenges beyond a simple Human Resource Management program at a local level. Global Human Resource Management not exclusively coversInternational producementAppropriate prep and developmentDeployment of these resourcesBut excessively goes beyond simple HRM in opposeing brotherly international industrial relations.With international operations, managing the employee base worldwide has its own challenges.P Morgan There are 2 sets of unsettleds when it comes to HRM in for an International OrganizationFirst -employee typecasts atomic number 16 Political, labour laws, culture, legal environment, economic, and practices prevailing in contrastive countriesA no-hit HRM model for an international organization is the successful interplay amongst these 2 sets.Clearly there is a need to go beyond basic HRM practices to allow inMore functions and activitiesIn depth wisdom of employment law of the swarm unsophisticated closemouthed involvement with employees personal variablesProvide for external influencesExposure to brisker hurdles and risksManaging differential pay packagesManaging ethnic, gender differencesMore liasoning activitiesMore travel and coordinationHigher management of extraterrestrial being risk variables beyond the country where the headquarters are basedIt is imperative that Human Resources Management models are deployed in a global context to undertake success.Main BodyThe Concept of GlobalizationWhile Global trade itself is not a new concept, Globalization is. Globalization can be delimit as a process of trade and investment transcending political bound aries undertaken by an interaction of people, processes, entities and spurred on by advances in political systems, technology, business ethics and affecting culture, environment societies leading to cross b golf club prosperity.International trades consecrate been undertaken historically. Traders have traded goods and services over large distances travelling by land and sea.Eg, The silk route that connected the Western World with Central Asia China during the Middle Ages.As time take placeed further, we see that cross-border trade, investment immigration boomed.Eg. Since the mid(prenominal)dle of the 20th Century to today world trade has exponentially grown by 20 times. Only in the last 5 years of the 20th Century, foreign investment currency cling went to US$ 827 billion from a meagre US$ 468 billion.This has had an impact on fiscal policies of governments that have opened up its economies in a controlled manner, both domestically as salubrious as beyond their borders.Eg. The 1991 Financial Budget given by then Finance Minister of India, Dr. Manmohan Singh was figuratively the door to globalization for India. India hasnt looked back since in terms of its growth and prosperity. India adopted a free- market place economic system. This greatly increased its own production potential and created a bouquet of opportunities for its own companies and organizations across the world for international trade and investment.Companies started growing by virtue of the geography of their businesses and operationsHRM in the baptistery of such Globalized businessesIn such a slashing environment today Human Resource Management in a global paradigm involves the manpower planning of staffing requirements the world over, selection of the right candidates, procreation development of employees for global operations. Since it is established that human resources form the backbone of any strategy, implementation of any strategy to succeed globally with Human Resource Manag ement at its core can provide a strategic competitive edge.Human Resource function in this environment has to provide a give birth function to line manager by providing guidelines, searching, training, and evaluating employees. With an effective HRM function deployed, the organization would be able to leverage the knowledge, experiences and the skills of its distinctive employee bases the world over.The Increasing Diversity of the WorkforceAs Globalization constitutes steam and becomes the norm, the employee base of multinationals has become varied and rich with nationals from all over the globe. Human Resources across companies have become homogenized, enriching the organizations with depth of knowledge about variables affective markets both within the countries as well as between them. The most successful organizations are ones which utilize this resource to the maximum. Having an experienced employee from a remote market on the team is a natural consequence towards better unde rstanding new market dynamics and new consumer behaviour.Culture in different countries or the mode of doing business in different countries is also differentDeal Focus Relationship FocusCountry wise scatteringFormal Culture Informal CultureCountry wise distributionTherefore HRM today for an international organization, has to considerDifferences in HR practices in the local organizationsPerception of HR as a function.Attitude and actions of headquarters towards HRResistance to change in a myriad of different situationsCultural differences in teaching and assimilating stylesThe Changing Nature of the WorkplaceA diverse organisation will out-think and out-perform a homogeneous organisation every single time. A. Lafley, chief executive officer Procter GambleGlobal competition presents a case for Global co-operation. Today, to a greater extent than ever in the first place, employees find themselves rubbing shoulders with someone from a different culture, race and positionnershi p on an everyday basis.HR departments in these multinationals have to recruit, develop and retain people who have vastly different backgrounds. This has resulted in new skills to succeed such as sensitivity and other relational aspects.This is termed as ethnic intelligence.Cultural intelligence is defined as the capability to adapt effectively across different national, organizational and professional cultures (Earley, Ang and Tan, 2005).Today employees across industries are given job roles globally, taking them around the world. In this new environment employees from home country as well as the extradite have to learn how to work with each other given that they not only think and communicate differently but also execute differently.The Human Resource Departments need to develop their heathen intelligence to manage this smorgasbord in their companies.The departments have to allow for newer challenges in the face of international employee deployment such asManaging international identificationsEmployee and family adjustmentSelecting the right person for a foreign assignmentCulture, communication and gauge address and communicationStaffing ladder in an International OrganizationStaffing in an international organization goes beyond simply forecasting requirements and selection of the right candidates to fit a job description. It is also a tool to develop and promote the organizations own value system and culture.In an international scenario the following models could be deployedAn Ethnocentric staffing insuranceA Polycentric staffing policyor a Geocentric staffing policyETHNOCENTRIC STAFFING POLICYIn this policy, top management positions filled by kick upstairs-country nationals. It is truly the best(p) suited to international organizations.AdvantagesIf the drove nation does not have qualified managers, the vacancies can easily be filledThe culture of the HQ is easy to spread.Easy transfer of disclose skills and operating proceduresDisadvantagesMay res ult in bitterness in host countryDeterrent to ethnical diversityPOLYCENTRIC STAFFING POLICYWhen this policy is deployed Host-country nationals manage subsidiaries and parent company nationals hold find headquarter positions. Multi-domestic organizations can benefit from thisAdvantagesHelp rich cultural diversityImplementation is cost effectiveEasy transfer of expose skills and operating proceduresDisadvantagesLimits chances of host country employees getting exposure outside their own nationPossibility of gap in commissioning, values and work culture between HQ and host country operationsGEOCENTRIC STAFFING POLICYThis policy seeks best people, regardless of nationality. Transnational organizations and Global entities can benefit from thisAdvantagesOptimum deployment of optimal resourcesEmployees get exposure to different culturesCreates a centralized value systemDisadvantagesLocal immigration policies may inhibit 100% deploymentHigher be associated with training and movementMay require complex allowance structures to succeed.The drive out DichotomyFurther when a citizen of one country works in another country, HRM unavoidably to take care of a myriad of issues without which there is a strong chance of failure and a premature return of the employee to his home countryThe costs associated with failure are not low and are generally estimated at three times the expats annual profits in addition to the costs associated with relocationThe issues that can crop up when expats are deployedImmediate family may not adjust to a new environmentThe employee may not adjust separate personal issuesCulture shockMay not be able to cope up with bigger responsibilitiesBased on how complex the business is and faculty of the HR function, it is important to deploy the i embrace staffing policy.Recruitment and SelectionInternational Labour Market SourcesParent Country Nations (PCNs)PCNs are managers who are citizens of the Country where the MNC is headquartered.The reasons for using PCNs includeThe desire to provide the companys more promising managers with international experienceThe need to maintain and facilitate organisational coordination and controlThe unavailability of managerial talent in the host countryThe companys view of the foreign operation as short livedThe host countrys multi-racial populationThe belief that a parent country manager is the best person for the job.Host Country fields (HCNs)HCNs are local managers hired by MNCSThe reasons for using HCNsFamiliar with the culture, languageLess expensive, know the way things done, rules of local marketHiring them is good public relationThird Country Nationals (TCNs)TCNs are managers who are citizens of countries other than the one in which the MNC is headquartered or the one in which it is assigned to work by the MNC.The reason for using TCNsThese people have the necessary expertiseThey were judged to be the best ones for the job.Selection procedure of ExpatriatesUse of selection test tec hnical AbilityCross cultural requirementsFollowing traits are identified s predictors of expatriate successCultural empathyAdaptabilityDiplomacyLanguage abilityPositive attitudeEmotional stability and maturityFamily requirementsMultinational requirementsManagement philosophy or approachThe mode of operation involvedThe duration of assignmentThe numerate of knowledge transfer inherent in the expatriates job in foreign operationLanguage skillsExpatriate Success factorsWilling and motivated to go overseastechnically able to do the jobAdaptableGood interpersonal skills and be able to form relationshipGood communication abilitySupportive familiesAdaptability to cultural changeWork experience with cultures other than ones ownPrevious overseas travelKnowledge of foreign languageAbility to integrate with different people, cultures, and type of business organisationThe ability to sense developments in the host country and accurately evaluate themThe ability to solve problems within differen t frameworks an from different perspectives sensibility to subtle differences of culture, politics, religion and ethics in addition to individual differencesFlexibility in managing operations on a continuous basis, despite of lack of care and gaps in informationGlobalized HRM roleTwo major types of adjustments that an expatriate must make when going on an overseas assignment.Anticipatory adjustmentCarried on before he leaves for the assignmentIt is influenced by following factorspredeparture trainingpervious experienceIn-country adjustmentTakes place on siteIt is influenced by following factorsAbility to maintain a positive outlook in high pressureJobs as reflected by the role he plays in managing, authority he has to make decisions, newness of work-related challenges and the amount of role conflictsOrganisation cultureNon work factors toughness with he faces new cultural experience, family adjustment with new countrySocialisation factor to know what is what and who is whoExpatri ate Training and DevelopmentNeed for Training to ExpatriateCost of expatriate failure is very highTo build a team of internationally oriented, committed and competent personnelMinimize personal problems such as politeness, punctuality, tactfulness, orderliness, sensitivity, reliability, tolerance and empathyImprove overall management stylePre-departure Training- Emphasises on cultural awareness and business customs of the country of bank note to cope with unexpected events in a new country.Post-departure Training helps in minimising culture shock and depression that usually sets in a new country and culture.Cultural IntegratorAn individual who is responsible for ensuring that the operations and systems are in accordance with the local culture.He advises guides and recommends action essential to ensure this synchronisation.Even though expatriate are trained before being sent abroad, they are still not totally prepared to deal with the day-to-day cultural challenges because they la ck field experience.He is responsible for handling problems between the subsidiary and host cultures.He may be from parent country or host country who has intimate knowledge of the companys culture and can view operations from both sides.He can only advice ore recommend a course of action.Management philosophy and trainingEthnocentric companies will provide all training at the HQ.Polycentric companies will rely on local managers to start responsibilities for seeing that the training function is carried our wherever appropriate.Geocentric companies forge training courses in different parts of the world, where a particular function is best carried out.Regiocentric companies organise training courses in different countries of the region.Cultural Awareness TrainingThere are five types of pre-departure trainingArea studies that include environmental briefing and cultural orientationCultural assimilatorsLanguage trainingSensitivity training andField experienceTo decide the rigour and le vel of training, following factors are important head of interaction required in the host culturesimilarities between home and host culturesIf interaction is low and similarities are high, then training should be on task and job related issues rather than culture related issues.If interaction is high and similarities are low, then training should be on cross cultural skill development as well as task.Preliminary visitsaverage duration will be about one weekA well planned overseas trip for candidate and spouse provides a preview to access their suitability for job, introduction to host country management, accommodation required, and schooling facilities available.Language trainingTypes of cross cultural trainingEnvironment briefing about geography, climate, housing and schoolsCultural orientation to familiarise with cultural institutions and value system of host countryCultural assimilators to provide intercultural encountersLanguage trainingSensitivity training to develop attitudina l flexibilityField experience to make expatriate familiarise with the challenges of assignmentCultural AssimilatorsIt is a programmed learning technique that is designed to expose members of one culture to some of the basic concepts, attitudes, role perceptions, customs and values of another culture.These assimilators are developed for one culture where the candidate is currently working and the other culture is where he is proposed to be posted.Type of assimilatorsThe trainee read a short outcome of cultural encounter and choose an interpretation of has happened and why.Critical incidents to be identified as a critical incident, a situation must meet at least of the following conditionsAn expatriate and a host interact in the situationThe situation is puzzling or likely to be misinterpreted by the expatriateThe situation can be accurately interpreted if sufficient knowledge about the culture is availableThe situation is relevant to the expatriates task or mission requirementsCompe nsation ManagementFactors Influencing Compensation ProgrammesCompensation decisions are strategic decisions and play a key roleIt should be consistent with overall strategy, structure and business needs of MNCIt must attract and retain the best staffIt must facilitate the transfer of international employees in a cost effective manner.It should give due consideration to equity and ease at administration.It requires the knowledge of employment and taxation laws, customs, cost of living index, environment and employment practices, the knowledge of labour markets and pains norms, foreign currency fluctuations.Paying Expatriates unique problemsDiscrepancies in pay between PCN, HCN and TCNThe need to vary expatriate compensation depending on the life cycle of the expatriates familyCompensation issues related to re-entry into the parent country organisationApproaches to Expatriates CompensationGoing Rate ApproachBase salary remains nexused to the salary structure of the host country.Requ ired information is obtained through compensation surveys and published information.This approach is favoured by polycentric organisationAdvantageEquality with local nationals and expatriates of different nationalsSimple approach allure the nationals of PCN and TCN if location is a high-pay countryDisadvantageTransfer from a developed country to a developing countryFighting for getting favourable posting and resisting low pay country postingsProblems when the expatriates repatriated to the home countryAn export or import or franchising arrangementCompany appoints an export manager who reports to chief of trade and all operations concerning export and imports are controlled by the home officeBalance Sheet ApproachIt links the salary of expatriates and TCNs to home country salary structure.Assumption Foreign assignees should not suffer financially due to transferSalary package is divided into goods and services, housing, income taxes and reserve.Cultural bear upon and Compensation PolicyNational cultural differenceHigh power-distance the compensation system should reflect hierarchical divisions in the firm.Low power-distance the salary system should be more egalitarian and deed based.Individual cultures rewards should be given on an individual basis.Collectivist cultures they should be team based.Culture with high masculinity compensation policy focus on social benefits, quality of work life and equity.Culture with high uncertainty avoidance structured and consistent pay plans are preferred with no variable plans and discretionary allocation.Culture with low uncertainty avoidance pay should be linked to performance.Performance Management in International OrganisationsPerformance Management and its link with other HR ProcessesReward ManagementHuman Resource PlanningTraining and Development ProcessRelationship with strategyMultinational Performance ManagementWhole vs partNon-comparable dataVolatility of the international environmentSeparation by time an d distanceHQ-subsidiary interdependenceEthical and legal issuesMarket adulthoodPerformance Management of expatriates decisions and play a key roleSetting kick the bucket goals for each unit, each department and each employeeGoals must be in return supportive and balanced for long and short term needs.Setting standard and measurement criteria for evaluating each type of goalFormal monitoring and review of progress towards these objectivesUsing the outcomes of the review process to reinforce desired employee behaviour through differential rewards and identifying training and development needs.Variables that Influence Performance of ExpatriateCompensation tractNature of AssignmentRole ClarityPsychological Contract HQs supportEnvironment of the Host CountryCultural AdjustmentCritical Success Factors RecommendationsThe Impact of Diversity and the Changing Nature of the Workplace on Human Resource Functions in Work OrganizationsGiven the era of Globalization, managing diversity at t he workplace has become a business issue for the HR Department and no longer simply a moral, social, or legal concern. The challenge is no more creating a diverse employee demographic, but empowering one that already exists due the natural global nature of the business.Despite all the hype around Diversity and the pros of having a multicultural workplace, organizations still tend to reflectSoft implementation of highly expensive Diversity Management ProgramsA poor gender ratio when it comes to higher managerial positionsPoor integration of disabled people into the employee base.Senior management teams not reflecting ethnic diversity.Some critical success factors to ensuring that diversity is leveraged well by organizations includeA) Clear organization wide understanding of the business case for Diversity.The HR department along with the ranking(prenominal) management and the line managers need to be clear about the need to be diverse and embrace new cultures and ethnic backgrounds into their folds. Going beyond corporate trainings and having blurred notions of how multi-cultural employee base would help the organization to gain competitive edge over local competition in remote markets, all levels of the organization need to clearly articulate how a diverse human resource base would help reach the organization goal and hence their own individual goals. Further they understand that a multi-cultural workforce can emend their organizations adaptiveness and change readiness. This would clearly improve the culture within the organization to recruit, develop and retain the best staff.B) Assessment of Current Situation.HR departments that are particularly successful at managing diversity routinely spend time, money and effort in gauging the ever changing composition of the workforce given geographical expansions, attrition and new recruits. They routinely assess not just numbers associated with the above dynamics but also behaviours, and culture associated with thes e changes.Eg. Eastman Kodak created a specialist external diversity grace to conduct an outsider review of the current situation. The Management of Eastman Kodak assessed recruitment policies to address cultural imbalances and even cultural blocks to retaining and developing a multi-demographic employee base.Without the above HR Departments would only end up paying lip service to managing diversity or spending huge amounts on expensive specialist corporate trainings on managing diversity without actually creating a basic inclusive work culture. Ergo, wasting time and effort on initiatives that are unsustainable in an environment where self assessment itself is not done.C) Managing Diversity is a top-down approach.Successful diversity management initiatives are ones that have high visibility of the senior management team.Eg. Back in mid 90ies, Lou Gerstner identified diversity as a key strategic initiative for IBM globally. He was a strong proponent of leveraging differences to addr ess new markets. He established eight task forces representing various ethnic groups, allocating executive sponsors from his direct reporting team and insisting on specific measurable results within stipulate timelines personally reviewing progress on the results.Many HR departments have gone beyond simply including diversity management in their employee handbook and actually championed background up panels and councils that include senior executives. Diversity management may require fundamental changes to the very culture of the organization and hence require stewardship by the senior executives.D) HR initiatives need to promote cultural harmony rather than address cultural imbalances.Initiatives from HR need to promote creating a multi-cultural environment. Simply having reservation position and quotas and fancy cultural training and diversity training is not enough. HR Departments need to ensure that minorities have the same opportunities and such initiatives are an integral pa rt of their day to day working rather than simply an extra curricular taskEnsuring objective appraisal systems, rewards and recognition and universal training and development opportunities is key to promoting an all comprehend holistic HR approach.E) Objective assessment of the Diversity management initiative and scientific assessment of programs are key.Many HR Departments have succeeded in developing measurable diversity management programs.E.g. the Hyatt Hotel Group the world over ties approximately 15% of the bonus potential to diversity goals.HR Departments that have been successful in managing diversity have translated it into a core competency used to assess the performance of management.F) Diversity Management principles are all encompassing and wholesome enough for everyone to participate.If the Diversity Management programs are only a bastion of the senior management, the entire exercise would be superficial and unsustainable. In order to result in successful recruitment, retention and development of employees in a globalized world, it is important that it is an inclusive program cascading throughout the organization.E.g. IBM created specific task forces but more importantly invited participation in the form of inputs to help these task forces in creating an inclusive culture.Managing diversity and the every changing workplace in the face of globalization is not the prerogative of the senior management alone but is to be implemented at the grass root level where managing diversity to retain and recruit top talent is a challenge in itself.These critical to success factors for managing diversity are not complicated models however they are tough to actually execute and require a motivated effort on the part of the Human Resources team and buy-in from the entire organization.ConclusionClearly Globalization has brought about a paradigm shift to International Trade providing it with a great boost.I feel, employees form perhaps the most critical resource b ase since they are