Impact of Human Resource Management Practices - Case Study Example

A REPORT ON INTERNATIONAL HUMAN RESOURCE MANAGEMENT Executive Summary The following report is based on problems identified in a case about international business management. The main problems identified relate to the management of human resources and cross cultural relations at the international level. The report is divided into two major sections. The first section presents a review of issues and challenges in international human resource management. The second section is a critical analysis of strategies for combating the issues identified in the first section. The researcher found that one of the most challenging issues in international management of human resources is the difficult of coordinating work activities for diverse organizational members. This difficulty makes it impossible to realize organizational goals and objectives. Basically, issues of cross culture impact on organizational performance by diversifying the range of skills available to an organization. This enables organizations, especially those operating at the international level, to show more results than groups that consist of human resources from the same mindset. Moreover, effective management of cross-cultural issues increases the capacity of individual employees to work with people of different backgrounds, nature, and habits, which in turn increases motivation by fostering positive attitudes. Introduction Issues of human resources and workforce diversity at the international level can be quite challenging. Harzing and Van Ruysseveldt (2011) defined effective management of workplace diversity as the ability of an organization’s human resource function to accept, value and respect the asset of talents, ideas and knowledge that is unique to each person. In the modern world of business, issues of human resource and diversity management are as important as other issues of organizational management and bring numerous benefits to organizations such as innovation, creativity and motivation. These benefits are in turn used to enhance an organization’s ability to compete effectively in the market. Accordingly, effective human resource and diversity management has become a symbol of efficiency in the internationalization process. Human Resource and Cultural Issues in International Business Management The root cause of the problem that Fred experienced in his new position relate to a failure by the company to implement efficient human resource management practices for its international business. The growing trend for internationalization has given rise to the need for companies to develop effective and flexible management practices (Mendenhall, Oddou & Stahl, 2006). For many organizations, satisfying this need entails thinking about cross cultural issues and more overtly understanding and appreciating the benefits of diversity in international human resource management. This requires the integration of practices relating to teambuilding and understanding of the benefits of offering diversity management. To a great extent, the headquarters’ Human Resource management is responsible for the situation in the case study. HR understands that, by going international, cultural influences would most likely shape the business structure and management practices. Doing business in foreign countries can be very challenging because of the incompatibility of standards and perceptions of a company’s human resource practices and policies (Pilbeam, 2006). The headquarters’ human resource management has the responsibility to ensure that it engages the right approach to staffing by considering everyone from their different cultures and backgrounds. Although this may not seem like a simple task, it is the case that, if the expatriate staff worked with the human resource manager at the Tokyo office, the relationship could greatly facilitate cultural understanding between the staff members. Moreover, it was necessary for the headquarters’ HR to consider recruiting a Japanese to manage the Tokyo office. This could help make the Japanese staff more loyal and readily willing to work with the director than an American. The Japanese HR also failed by not lobbying the staff to support Fred. The Japanese HR could do this by developing appropriate human resource practices that could make the staff more loyal and motivated to work with the new director. In addition, the Japanese human resource department had a duty to inform the new director of the behavior of the staff so that the new director could determine the right approaches for managing the organization and its people. The situation indicates that the company’s human resource management is incompetent and poorly functioning. This is well reflected by the overall state of affairs of the Tokyo office. There is a wide disconnect between the Tokyo HR department and the executive management, and this is responsible for the apparent miscommunication, critical mistakes and poor decision-making on various operational aspects. It is clear that employee training and development programs at the Japanese office are not properly budgeted for. Poor human resource planning ensures that organizational assets, including human resources, are not aligned to an organization’s goals and objectives (Mendenhall, Oddou & Stahl, 2006). Although multinational companies can achieve much by working with diverse teams, the most successful global players are likely to be those that have embedded change through integrated diversity changes to employee selection, recruitment, development and reward, as well as achievement recognition policies and practices (Pilbeam, 2006). In so doing, the benefits of effective cross-cultural management can be reflected at different levels of an organization’s international business process. This then enables companies to build global capabilities and competitive advantages. Human resource management is the most important issue in international business practices and is one of the issues with which Fred must contend. Morden (2007) noted that the majority of transnational organizations fail or become inefficient because they standardize human resource management practices in the belief that a common strategy can coordinate business operations and lead to organizational efficiency. Researches have, however, shown that standardization of practices by multinational organizations is a negative factor in the internationalization process because of unexpected changes in business environment and market structures. Harel, Tzafrir, and Baruch (2003) explained that different people in different cultures value different cultural practices and conceptions about organizational behavior. As such, differences in labor market, culture and customer relationship management can be a major cause of challenges for multinational corporations. These factors may cause difficulties in attracting and retaining qualified staff. The complexity and diversity of cross- national cultures is one of the factors that resulted in strategy conflicts for Kline & Associates’ new office in Japan. Since the company did not fully localize its worksforce in Japan, it was difficult for Fred to overcome the difficulties of international business management. Guthrie (2001) explained that effective human resource and diversity management are essential factors in international business management. Effective management of the two factors helps organizations recruit and develop dynamic and flexible workforces that promote an organization’s strategic business objectives. Morden (2007) emphasized that issues of cross-culture pose an important challenge for international business managers. People from different countries have different attitudes and traditions about business. As such, it is imperative for Fred to take time to understand the fundamentals of Japanese culture. In the modern times of globalisation and internationalization, the ability to accommodate cross-cultural issues in business has become an important consideration for organization to be aware of and to practice. It is vital for human resource managers in multinational corporations to have a global vision and strategy for managing diverse workforces (Richardson & Thompson, 2002). Successful management of international human resources enables companies to compete effectively in the international marketplace and is an excellent staff development tool. An understanding of the strategies for effective human resource management at the international level is necessary for business success. Harel, Tzafrir, and Baruch (2003) have explained the essence of international human resource management in terms of a system as a set of distinct functions, activities and processes that are aimed at attracting, developing and maintaining the human resources of a multinational organization. Just as effective human resource management plays a critical role in the success of domestic companies, effective management of human resources at the international level plays a critical role in the failure or success of international businesses. A common problem associated with international management of human resources is that expatriate employees might not be willing to accept local customs and rituals in the host country. Since an organization’s human resource management has the responsibility to promote the development of their employees by encouraging continuous learning, successful management of the business becomes a centre for exchange of business knowledge and enhancement of new skills and capabilities (Guthrie, 2001). However, regardless of how effective human resource practices are in promoting employee training and development at the global level, failures are bound to arise. Reasons for failure may range from complexity of the business climate to failure of employees and their families to adjust to unfamiliar business environment and issues of cultural incompatibility, as is the case with the Baileys. In some cases, employees are slow to adapt to new ways of life and new ways of running a business. Similarly, repatriation is a critical issue which is often overlooked by human resources, and, as a result, returning employees may experience reverse culture shock (Guthrie, 2001). Researchers in international human resource management have shown that employee relations vary significantly between countries and that the strategies used to motivate employees in one country become useless in another country (Evans, Pucik, & Björkman, 2011). This is perhaps one of the reasons why it was difficult for Fred to get the best out of the employees in the Tokyo office. It has been shown that Japanese employees value lifelong employment and welfare provisions such as meals, paid sick leave, schools and healthcare. Although this view has been changing gradually, many multinational companies interested in investing in Japan have entrenched ideas of what typical employee relationships are likely to be. Essentially, the intangible cultural fit between American companies and their offshore investment opportunities should be reinforced by employment ethics, job-specific commitment, and expectations for long-term relationships (Rondeau & Wagar, 2001). Strategies for Effective International Human Resource Management The role of human resource managers has evolved consistently with changes in the competitive market environment and the realization that human resources play an important role in the success of businesses. Multinational organizations that do not put their emphasis on attracting and retaining highly talented workers may find themselves in consequences as their competitors may outplay them in the strategic management of human resources. With the increase in global competition for markets, business managers must become more resilient, adaptable, agile and people-focused to succeed. Silverthrone (2001) noted that, in order for business managers to succeed in changing cross cultural workforces, managers should evolve to become strategic partners, change mentors, and advocates of employee rights within organizations. In order for Fred to succeed in managing the staff as well as the business at the new Tokyo office, it is important for him to capitalize on his authority as the managing director to develop and promote a big understanding of the company’s business objectives and organizational culture. One of the most compelling options for Fred is to develop and promote an atmosphere of workplace diversity. According to Becker (1996), the dimensions of workplace diversity include age, sexual orientation, cultural and religious backgrounds, physical abilities and qualities, education background and ethnicity. It is apparent that Fred’s success in his new position as the head of the Tokyo office lies in his ability to integrate a diverse body of talent, which can bring new and innovative ideas, skills and perspectives to work (Browaeys & Price, 2011). A major problem associated with diversity management is that diverse workforces are prone to misunderstandings and communication issues. Fred can, however, turn these challenges into strategic opportunities by capitalizing on the key strengths of diverse talents. With a mixture of talents and skills in diverse backgrounds, ages and lifestyles, Fred can easily respond to the company’s business opportunities, especially in the new market. Most importantly, if Fred cannot support diversity broadly the company may lose valuable talent to competitors. The other important option is for Fred to initiate a mentoring program to help improve the morale and willingness of the staff in Tokyo office to participate actively in business operations. A mentoring program could involve, among other things, departmental managers providing coaching and feedback to employees (Edwards & Rees, 2011). Usually, mentoring programs help encourage staff to air their opinions and learn to solve conflict related to diversity. More importantly, mentoring helps encourage members move beyond their personal frame of reference to recognize and take advantage of productivity potential inherent in a diverse population. Although mentoring programs may involve the outsourcing of consultants, which is an additional expense, it will go a long way in developing a motivated and royal workforce ready to execute business tasks. Fred also has the option of considering motivation approaches in an attempt to court the loyalty of the staff at the Tokyo office. Workplace motivation is defined as the influence that makes employees proactive and do things which help achieve organizational goals (Silverthrone, 2001). Motivation is a result of an employee’s workplace and personal needs being satisfied so that they are encouraged to complete organizational tasks successfully (Browaeys & Price,2011). As needs and preferences vary from one person to another, organizations should utilize different motivational approaches and tools to encourage employees to put in the right effort and increase productivity for the company. As such, the Japanese staff needs to be motivated to ensure survival of the business. According to Zhang and Edwards (2007), motivated employees and their contribution is necessary for a business’ success and survival. The main motivational factors in businesses include job satisfaction, working environment, and appropriate reward systems. Development of an appropriate rewards system is one of the most important tasks that Fred will have to address. Rewards can influence both motivation and job satisfaction. For instance, offering the Japanese consultants a fair salary can make them more content and comfortable. It is imperative for the Japanese human resource management to take into account the fact that effective management of cross-cultural issues can have a positive impact on teamwork productivity. Becker (1996) explained that transnational organizations can gain immense benefits through effective diversity management. These benefits include enhanced decision-making, conflict resolution and improved problem solving. In addition, diversity management can greatly foster innovation and pro-activity, which in turn results in improved business operations as well as product development and marketing. By recognizing the need to integrate diverse talents, the Japanese human resource function can link different talents and capabilities in the office in order to achieve strategic objectives. Conclusion Management of human resources at the international level of business is a challenging issue. This becomes worse when there are issues of cross-culture and diversity. Management of diversity involves appreciating differences in employee skills, cultural orientations and talents. Recognizing these differences is an important step in understanding the human resource needs of employees. When employee differences are understood and appreciated, it becomes easy to create a work environment that fosters motivation and increased productivity. Generally, successful management of human resources is critical to the success of an organization at the international level. 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