International Human Resource Management - IKEA - Case Study Example

International Human Resource Management Expatriate Report Course name: Professor’s name: University name: City, State Date of submission: Table of Contents 1.0 Introduction 3 2.0 Background 4 2.1 Global Leadership Development 5 2.2 Global performance management of international staff 6 2.3 Global reward management of international staff 7 3.0 Findings, recommendations and conclusion 8 References 9 1.0 Introduction Globalization is characterized by the movement of goods and people across borders where some of these people choose to stay in foreign countries as residents. These people are referred to as expatriates and their numbers have continuously risen year in year out. The rise can be attributed to the employment opportunities in foreign countries, the allure of jobs and better pay and benefits being the main pull or push factors. The main facilitators of this trend are the development of transport and communications that have made the world more interconnected. These technologies have eased the movement of goods and service especially long distance travel technologies such as air and rail. Increased exchange of information due to improved communication technologies has allowed businesses and people to access information on foreign nation motivating them to move into these foreign countries to exploit the opportunities there. In the current business world, globalization is, therefore, inevitable, and if anything, it will continue to increase. The movement of people has come with its own set of advantages, disadvantages, and challenges. Among the advantages is the dissemination of skills and technologies, as people move into these foreign countries they bring with them the knowledge and experience that they had acquired in their home countries[Sax]. Businesses too are able to bring new goods and services into these foreign markets, with this they are able to expand their customer base and with it, their profits. The flow of foreign countries is able to facilitate the development of adopted countries and/or home countries depending on the situation. Foreign countries are often the main objective of countries encouraging foreign investment, bolstered foreign reserves allow these countries to strengthen their export capabilities and currency as well. Foreign currency has also been known to motivate people to migrate to other countries and settle there. The strength of a currency can act as a pull factor for expats, incidentally, some expats prefer moving to countries with weaker currencies to increase the value of their own wealth. Expats and businesses seem to face a number of challenges in their adopted countries. These challenges can range from issues such as semantic and cultural to environmental issues. Adapting to new environments is a challenge for any person as one has to accustom him/herself to new ways, beliefs, cultural practices and laws[Kot14]. Different countries more often than not have differing rules, regulations, and approaches to different business aspects or practices. Labor laws, for instance, may vary from nation to nation and as such businesses have to conform to these laws to be able to operate well. Foreign nationals are tasked with learning and understanding the new system of doing things as quickly as possible preferably before deciding to settle there. Language and cultural challenges are common for expats and other foreigners. Foreigners are advised to learn the local language of the people to facilitate faster integration and ease communication with the locals. This challenge is usually more troubling for expats in leadership positions in these foreign areas. This report will highlight the challenges businesses such as IKEA face in relation to workforce management, more so the expatriates, in foreign countries where they operate and offer solutions for these challenges. 2.0 Background Netherlands-based IKEA is the firm that is at the center of this case study. It is a designer, manufacturing and retail company that specializes in home furniture and other home related accessories. It is one of the most valuable and widespread retail companies in the world with an annual revenue of 30 billion dollars approximately. The company has a presence in all the continents not including Antarctica. It is run by the leadership of Peter Anefjall and Torbjorn Loof the company has a workforce of over one hundred and eighty thousand employees worldwide[IKE17]. With such a global presence and diverse workforce, the company is an ideal study when it comes to international workforce management. Such a presence makes the company a pace setter and industry standard when it comes to this area. A diverse workplace demands that one comes up with a policy and plan on how to identify and manage any issues that may arise due to this diversity. For this report, we will focus on its operation in two countries, Australia and China. These two nations are popular with expats due to their strong economies and highly developed infrastructure which often attracts businesses since these are the hallmarks of stability and continuity. These countries have established policies that are suited for foreign investment and the policies in place are similar to IKEA’s parent country, as such the company can benefit from quicker adaptation and integration with the society. The challenge facing most people who move to work in these countries especially in China is that of the cultural and semantic barriers as they are forced to learn the local languages in order to “survive” in this new environment. Good leadership and planning are necessary to ensure that the company enables employees to be able to acclimatize quicker through moves such as initiating language and culture training programs. 2.1 Global Leadership Development In this highly globalized business world, it is necessary that businesses develop their own leaders to run their foreign operations. This challenge is one that faces all globalized companies as they look for leaders to handle operation in unknown foreign lands. To reduce the burden of relying on home-based leadership it is important for companies to develop their own set of leaders to enable the decentralize leadership functions. A decentralized leadership will be able to make decisions faster and adapt quicker to the new environment compared to the centralized style of leadership. Most companies often employ locals to positions such as country managers, these locals are often highly skilled technicians or industry experts. It is a rare occurrence for one of the locals to be promoted to high positions in the company, here the company tries to train its own leaders from the headquarters and send them to run their operations in the host country. Training these leaders is a challenge in terms of cost and ethics. The company is tasked with coming up with a training program that would teach these new leaders the need-to-knows of the new markets and the industry practices. They need also to be taught the local language and culture to ensure that they are able to quickly adapt to the new market as quickly as possible. Such training programs are especially useful in ensuring that the leader can easily and efficiently handle his local staff since communication is almost certainly the key to success for any global leader[Cla16]. Such moves are desired to ensure that the company has firm control of their foreign subsidiaries although this poses an ethical issue. An ethical dilemma of not giving the locals key leadership jobs can develop, countries such as Australia and China are known for their highly nationalistic society and as such companies are urged to consider employing locals to run local businesses, this is to avoid conflict with the locals. To counter this the company can consider picking locals for global leadership training, this move can benefit the business as it would endear them to the local society and boost its reputation. 2.2 Global performance management of international staff Businesses strive to operate at optimum levels and it is the job of the leaders of these businesses to ensure that they are eating the forefront putting in place measures to increase the performance of their staff. In foreign countries companies usually, form these measures bearing in mind the local policies and industry practices. One challenge that has been brought about by globalization is how to deal with international staff in these subsidiaries. Measures are needed to be put in place by businesses to ensure that these people give optimum performances in their work. From the IKEA model, we can try to understand how best to deal with this issue. The company has been a success in global workplace management, being able to post such impressive revenue results means that they have put in place ways to ensure that their international staff performs satisfactorily[Ros78]. The company ensures that the employees are adequately trained to adapt to the new environment as quickly as possible. One way do this is to offer language and culture sensitization programs to enhance their interactions with local staff. Good communication can foster unity and teamwork within the organization thus creating the foundations for success. IKEA retail businesses receive a boost when its staff members are able to communicate efficiently with the local customers and staff since retail success is often anchored to the quality of communication with stakeholders. Quick acclimatization will also make the expat feel comfortable in the new environment, a tense worker is rarely one who posts good results. 2.3 Global reward management of international staff A happy employee is one that gives the best performance. The motivation of staff is one of the main tasks of a leader in any organization. Caring for employees’ welfare is one way of ensuring that staff is motivated. This welfare almost entirely refers to salaries and associated benefits, to motivate their international staff IKEA has to ensure that they are paid well and on time to ensure that they are highly motivated, salary concerns are often the main human resource problem or motivator. An international staff member requires that the business ensures that they are compensated fairly for equal work or contribution as that of employees in other countries[Chi08]. Setting a company standard pay structure that properly addresses the issues of difference in currency value, inflation rate and cost of living is necessary for international staff is treated equally compared to others in the parent company. The company can boost their international staffs’ morale by giving fair holidays to ensure that one can get time to go and see family and their homeland as regularly as possible since everyone at one point finds themselves missing their home country. Improving their living conditions is another way the business can ensure that they are motivated to work their best, the company can decide to offer cheap credit and/or new benefits to reflect the sacrifice they made coming to a foreign land. Establishing a merit-based promotion system can motivate others to work hard to improve their positions in the company. Ambitious employees will work towards improving their station by improving their performance results to be considered for the position[Fik15]. 3.0 Findings, recommendations and conclusion The global culture that IKEA has established in its global operations has led to it becoming a world leader on how to handle a diverse and large workforce. Companies looking to go global need to look at the practices being practiced by the company to form sound human resource management. Even as a world leader the company is yet to fully refine its global business to suit the current global needs especially in relation to expatriates. The business needs to ensure that expat welfare is considered to ensure that they can achieve the best possible performance levels required to keep the business continuously profitable. More needs to be done to ensure that the expats acclimatize to the new atmosphere. Engagement of locals in this process seems like the best way to achieve the desired results. Local participation will hasten the process of acclimatization as they are able to teach the expats of the industry, its practices, and other intricacies more efficiently than a contractor at the headquarters[Sax]. This move will also be key to ensuring that the expats gain firsthand experience and interaction with locals to be able to learn more than from a formal classroom lesson. References Sax: , (Saxena, 2009), Kot14: , (Kotabe & Helsen, 2014), IKE17: , (IKEA, 2017), Cla16: , (Clarke, 2016), Ros78: , (Rosenbloom, 1978), Chi08: , (Childs, 2008), Fik15: , (Fiksel, 2015), Read More