International Business SummaryThere was a time when travelling around the world in 80 days symbolized a great feat in travel and exploration. Today, travelling the world in a day is becoming as common as buying a loaf of bread. As our world become smaller, businesses find that they must adapt to the new world economy and environment. For Multi-national enterprises (MNE)s this poses a challenge to be ahead of the game when it comes to being competitive. More specifically, MNEs must decide how to progress their agendas for the future world of business through their Human Resources Management (HRM) policies, which plays a critical role in a businesses success. Businesses face a new age of understanding global dynamics.
Knowing how to develop strategies that align with all corporate strategies to be able to compete with an ever increasing and complex process of securing value resources. HRM is key to a business’ success. Companies who strategically link their human value tend to be more successful than companies who do not. This is due to the fact that companies managing international careers can face obstacles that include cultural, economic, political and economic differences which are to be considered in operational decision making.
HRMs ultimate goal is to recruit, develop and retain the best managers. If this is to happen various factors must be thought out that are interlinked with success. Companies who understand this important fact display evidence of this in areas of their business like in shareholder value. That being said, developing a good HRM strategy and implementing one is a different matter. The reality is that companies don’t always implement the HRM strategies as communicated.
Studies show that managers tend to leave companies after resettling and companies themselves report HRM is their weakest point in their business. To bridge the gap of HRM and the reality of it, companies need to make it an agenda or action plan. The alignment of HRM strategies with all operations is key. MNEs need to consider whether they use local, citizen, non-citizen or expatriates employees. A company’s values and ideas translate into assumptions or generalizations called frameworks. MNEs apply these frameworks to their staffing policies via in three different types of frameworks.
The ethnocentric approach is based on the belief in the supremacy of the home HRM. Being based in the core competencies of the managers, it can blind HRM policies to country difference and dulls competitiveness. The polycentric approach is a HRN policy that is country specific. This approach usually provides good use of local managers although the responsibility transfers to new company and disengagement of local staff with international offices can occur. Thirdly, the geocentric approach looks for best candidates globally. Though a hard and costly endeavour to develop it is also an approach where the gap between reality and theory is big and it is thought to be impossible to manage. Normally when companies decide to send expatriates to set a new branch or subsidiary they would have a team that has a finance person, a person with good entrepreneurial skills and a line manager with excellent soft skills.
These skills seem to cover the range of knowledge and expertise needed to overcome cultural, economic and legal issues. However, a major decision lies in the choice of expatriate candidate.