Globalisation and International Human Resource Management Concept - Literature review Example

Globalization and IHRM practice 03192 Table of Contents Table of Contents 2 Introduction 3 Globalisation and international human resource management concept 3 Convergence of Globalisation in human resource management practice 6 Factors promoting diversity in HRM practices of global firms 10 Conclusion 13 Reference list 15 Introduction According to Banfield and Kay (2012), Globalisation can be defined as the process or trend of regenerating economic, financial, and commercial system. It is also a process of integrating communications. Globalisation policy will increase economic and professional opportunities in local or national economy. Economies of different countries are getting interconnected and mutually dependent with different other countries. Globalisation is promoting liberated shift of capital among different countries. Albrecht (2010) demonstrated that international human resource management policies are adopted by the global firms to control their employees in the international base. Managers of the multinational organisations need to disseminate the core objectives among the employees. Moreover, Bjorkman and Stahl (2010) opined that multidepartment and multinational organisations are required to guide their employees in terms of achieving competitive advantage. International market promotes free trade concept, thus local and national firms will be facing the challenge of global competitors. In the international aspect, managers are required to develop effective strategies to guide the employees as per modified HR policies. In the current study, critical explanation of the internationalisation of HRM concept is outlined. In addition, internationalisation and globalisation policies are contrasted in terms of obtaining their effects on the Human Resource Management and Human Resource Development polices of different firms. Globalisation and international human resource management concept Davis (2011) stated that different organisations are trading their products and services in the international perspective. This policy is increasing the rate of trading among various countries; organisations are able to use the resources in the least possible expenses and lower caring cost. According to Bondarouk (2011), globalisation does not include transportation of labours. On the other hand, several economists observed that globalisation policies can harm fragile economies if used randomly. Foreign investment is increasing in international developing and developed economy. Phillips (2012) argued that firms are enjoying interconnected relationship among various markets. Therefore, labour force must be developed to maintain global forces in the operational context. HR policies are crucial to develop organisational labours along with developing skills and knowledge among the employees. Mayo (2012) opined that globalisation or internationalisation increased cultural exchange among the employees. Cultural background of employees is getting diversified in the international aspect. HR managers have to employ certain IHRM polices to develop employee efficiency globalised market. HR policies will differ as per the operations in national and international perspective. Joshi (2011) stated that globalised economy is adopting IHRM policies. On the contrary, HR policies like staffing, selection of potential candidates, training and development of the new recruits are different in the globalised organisations. Andolsek and Stebe (2012) argued that IHRM polices are adopting different performance appraisal methods as per country requirement. HR managers are adopting unique discharging policy for the employees working in the international organisations. However, Dickmann (2009) opined that global skills management will increase efficiency among the employees to handle changing demand of the operational policies. According to Batt (2012), concept of HRM policies was modified as per the globalisation factors and international structure of the firms. Organisational environment became more competitive in nature as well as firms are meeting changing customer demands. Dickmann (2009) critically evaluated that global economy is quite uncertain and unstable, thus management needs to implement effective strategies to achieve growth and sustainability. Human resource management policies must be developed as per globalised features of the economy. Firms need to manage their workforce of different countries in order to accomplish unique goals set by the top management groups. IHRM policies will help the organisation in reducing the cost of development employees. Cooper and Robertson (2009) opined that human resource policies of any global firms are composed of different tasks or responsibilities. IHRM promotes that human resource planning is one of the crucial strategies of the firms. Managers have to make proper job description with an in-depth analysis of the roles and responsibilities of the employees. Recruitment and selection process in the international aspect is a bit different than national or local staffing policies. Performance management process of the international firms includes proper appraisal policy (Bratton and Gold, 2010). HR managers need to develop unique career development process for the international employees. Compensation policy differs in different international set up, mainly rate of inflation, recession and availability of the labours are negotiating wage rate. Employee relations are one of the crucial terms in IHRM policies, managers have to interact with the employees. As per Armstrong (2012), industrial relation will aid the international HR managers in gathering information of problems met by the employees and develop solutions for each problem. Relevant training and development program is required to increase the skills and capabilities of employees. Thus, it can be said that the international HRM policies are closely interlinked with the globalisation factors. Convergence of Globalisation in human resource management practice Foreign direct investments are increasing in the developed and developing countries rapidly. Big firms are investing their capital in the emerging markets in order to enjoy more growth and profitability. The UK and USA based capitalist firms like Tesco, Sainsbury, Walmart, Nike, Adidas, Pepsi co, Coca-Cola, and Metro are making investment for developing their operational set up in Asian, Latin American and African countries (Kochan, 2013). These countries are having huge consumer perspectives. Organisations are penetrating in the global market to explore lower competitive market. With the help of global market organisations are able to rise the profitability. Although Ball (2011) opined that the globalisation has certain limitations also it is harming the local economy and local low capital firms. Big firms are required to be speculative in order to penetrate in any new country. Huge capital investment needs to justify various economical and financial aspects. Economic crisis is one of the major financial threats that globalised firms are facing in order to develop business strategies. Financial recession reducing the potentials of profit earning and organisations are failing to achieve growth and sustainability (Graham and Tarbell, 2012). During recession organisations will be facing the challenge of managing their human resources. International human resource management policies of global firms are increasing control on management of various issues faced by the employees. International approach of HR management is aiming to reduce the cultural gap among the employees (Becker and Gerhart, 2009). According to Barney (2012), Globalisation refers to a multinational platform of business operations. Human resource management will face huge challenge of the cross cultural barriers, linguistic issues, religious gaps, and racial issues. HR managers of international firms must develop strategies in order to reduce the gaps and facing up the challenges. American businesses who aimed to invest in the China to grab the opportunity of high profit oriented market are facing such challenges. International HRM will signify certain strategies that will aid the organisations in overcoming those barriers. In addition, Caldwell (2012) stated that increasing global competition demands more efficient and skilled employees. Managing people in the international aspect will be depending on the different type of factors like the political condition, economic status, and social culture of the international market and technological development of the society. HR managers are required to modify their strategies as per different country requirements. Managers must analyse the requirement and expectation of the employees to achieve the desired objective. Firms are adopting IHRM policies in terms of mitigating the challenges of international aspects. Managers are developing consistent international strategies in order to increase the coordination among the employees and management (Mathis and Jackson, 2011). International HRM policy will emphasise on the fundamental employee benefit related strategies and compensation rate as per the performance of the employees. Therefore, implications of different aspects in the strategic HR policies are highly solicited in terms of meeting the challenges. Economics related challenges are most common factors of the globalisation. Foreign trading, currency exchange rate, and corporations are impacting the HR policy of international firms. In addition, Greer (2010) argued that banking or financial market also aids the organisation to raise their relevant capital. Currency exchange rate also impacts the remuneration selection. Political aspect of any country is negotiating the rate of success of the globalised firms. Stability of the governance will increase the rate of growth or sustainability in the market. In the Middle East or African countries, globalisation rate is very low. Dowling (2008) stated that organisations are facing the challenge of instable political conditions. Globalisation seeks for Stable political condition, interest and tax rate for enjoying strategic success. Biles and Holmberg (2007) opined that socio-cultural factors are impacting the international human resource policies of different firms. Employees are from different communities around the globe therefore their socio cultural beliefs can conflict as per the different class segments. This can create a gap among the employees. Thus, IHRM is developing more feasible communication model to increase the exchange of information among the each individual employees. Cultural aspects of individuals and new countries, and government regulatory regulations of the developed countries will have an impact on the international HRM policies. There are many practises like employee orientation, training and development, employees engagement are adopted by the global firms to make international strategic development. Organisational culture needs to be disseminated among the employees (Losey, 2007). Multinational organisations are facing high challenge in maintaining unique culture in the organisation. HR managers are developing communication channel like the online media or groups to create more cultural exchange among employees. Thus, IHRM polices of the firms are developing conceptual framework to promote diversity management. According to Nickson (2012), conceptual frameworks of IHRM policies will be developed as per globalisation traits. IHRM policies will be making chronological strategies for managing and developing their human resources. The framework will be including the stages like the Recruitment and Selection of new candidates, Training and Development of the new recruits, Performance Management of the employees, Employee Relations and Compensation management. These attribute of the framework will help in discussing the human resource development policies of the global firms. Recruitment and Selection Boxall and Purcell (2011) opined that proper job description is provided to the candidates in terms of avoiding the uncertainty among the new recruits. Globalised firms HR management policy is promoting equivalent employment opportunity among the employees of different countries. However, recruitment policy of multinational firms is facing the challenge of difference among the skill set and education level of people from different countries. Training and Development New employees are trained as per the organisational goals and aims. Employees are oriented with the organisational culture. They are guided to achieve the self-improvement measures. Training and development helps global firms to avoid the uncertainty of failure by the new employees. Training will help the employees in obtaining the task related information and requirement. Training provides the skill development of analysis and developing strategic goals (Price, 2011). Performance Management According to Bordia and Blau (2010), this process will be assessing the individual achievement according to the predetermined goals and responsibilities. In the globalised organisations, HR managers are setting up challenging goals in order to achieve increased profitability. However, such goals involve high risk for the organisational perspective. Employee performance evaluation also includes grievance management. Multinational organisation’s managers are recognising complaints of the employees during the performance evaluation process (Delery, 2013). Compensation Chapman and Webster (2011) referred that compensation or the remuneration of the employees is one of the crucial factors of the IHRM strategic development. Globalised economy sets the compensation on the basis of experience or skills. In addition, status of the economy also affects the compensation management policies. Organisations are adopting performance-based reimbursement to create more employee satisfaction. In many countries, there are certain legislations that ensure least wages rate. HR managers are developing proper pension rates and proper employee benefits policies. Employee Relations Employee relation is another responsibility of the HR managers. Managers are developing employee interaction as per their cultural background. They are also developing sound harmony among the employees. Multinational organisations are developing different group of employees. Collective bargaining process is used by the international human resource management to obtain the needs and requirements from the employees and fulfil those needs (Farndale and Paauwe, 2010). Factors promoting diversity in HRM practices of global firms According to Gopinath (2012), globalised firms are facing different challenges for assessing diversity among the employees. Human resource management practises of the global firms are affected by social, political, legal, economic and cultural factors. International management have to manage the trait of the employees and other organisational members as per national boundaries. Managers have to maintain certain social and political factors in the recruitment and selection of employees. Training and development policies will include some legal and economic factors. Moreover, Doty (2012) argued that IHRM policies will integrate various organisational cultures among new employee’s cultural beliefs. Performance management and compensation actions are considering economic aspect to provide more values to employee’s expectation and perception. Employee relations policies also depend on various cultural and social factors. International HRM policies face difference among the socio-cultural aspects, political stability in different countries, legal aspects, and economic status of the different countries. However, Geppart and Williams (2011) contradicted that multinational companies need to develop strategies to achieve their unique goals and objectives. International organisations are developing their solo HR practises for controlling their employees. Major features of international approach are a bit different than the conventional human resource management policies. Biles and Holmberg (2007) stated that international human resource management policies are adopted by the multinational corporations. Firms are having Home country employees who are mainly residing in the country where the firm or organisation’s head quarter is located. According to Bratton and Gold (2010), Host country employees are those who reside in the global countries where firm’s subsidiary operates. Third country employees are also a part of the human resources; these types of employees are the part of any other country than the host or home country. Dowling (2008) stated that many American or the UK based MNC firms are operating their subsidiary in China, third country employees are from countries other than China, America or UK. Any employee from India will be considered as the third country employees. Management of these three types of employees will be affecting the IHRM policy. Greer (2010) opined that there are certain differences between domestic HR management policies and International HRM policies. Major reason of such deviation is the organisational structure. It is observed that national or inbound HRM is restricted to the small or local organisations. IHRM is a HR process that covers international stage for the organisations. International process of managing human resource will face certain challenges for cross cultural factors, linguistic issues, racial barriers, and different religious beliefs. Dickmann (2009) critically evaluated that there are many key issues that can arise in managing global and local organisations. Managers will face the complexity in selecting, managing and retaining experience staffs. International HRM will be facing certain issues regarding change management policies, leadership development process. According to Joshi (2011), international management are facing the issues like compensation management, staffing, recruitment, sequential planning, training development, and retention of experienced employees. Retention of the experienced employees is essential for maintaining higher skills set in the international organisation. International labours are changing their workplace for better opportunity and remuneration structure. Managers have to modify their IHRM policies to retain the employees. Recruitment policies of international firms are differing due to the international policies, political rules and technological process. IHRM department is facing the challenge of recruiting talent as per the required skills and educational level. Mayo (2012) opined that HR Managers have to ensure proper productivity among the employees. Multinational managers have to increase operating efficiency of teams or new recruits by guiding them. Intense communication is essential for disseminating required goals and objectives. Training are provided by the HR mangers as part of employee development, this process requires management must have sound knowledge of the cultural back grounds of the employees. On the other hand, Phillips (2012) argued that international organisation training and development process is quite complex due to different cultural background of employees. International HRM policies are impacted by the health and safety criteria of the employees. Managers must be concerned about the welfare of the employees. Price (2011) stated that IHRM is facing complexity of managing employees due to inequity and multiplicity factors. International HR managers have to develop strategies for various employees from different cultural, regional and social backgrounds. In addition, IHRM implements disciplinary issues which will control the actions of the employees. Apart from these factors, international human resource managers have to negotiate the remuneration for the employees. In the post recessional economy, employees are demanding high wages. Caldwell (2012) suggested that collective bargaining process is implemented by the multinational managers to set the compensation strategies. Conclusion This study is providing the critical connection among the globalised environment and IHRM policy. Above mentioned factors are critically contrasted to explore the relationship among them. It is obtained that globalisation is increasing the rate of competition among the firms, as firms are able to penetrate into the international markets. Free trade concept is empowering international capital investment in many developing countries. Therefore, employees are playing crucial role in executing various strategies or objective set by the management. Human resource policies of the international organisation are getting modified to meet the challenges. This study is providing industrial relation and cultural developments are interlinked with the international HRM strategies to maintain efficient employee base. 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