Strategic and Comparative Human Resources Management - Assignment Example

Strategic and Comparative HRM Name Institution Strategic and Comparative HRM 1. To what extent do the disadvantages of outsourcing the human resource function outweigh the potential advantages? Introduction This essay evaluates the extent to which outsourcing of human resource function has disadvantages outweigh advantages. The essay first analyse the concept of outsourcing. It also gives an example to illustrate the concept of outsourcing using some companies like Capgemini, Intel and Microsoft. It further analyses some of the disadvantages of outsourcing human resource function including poor performance and information leaks. Therefore, this essay will discuss the extent to which disadvantages of outsourcing human resource functions outweigh advantages. Disadvantages of Outsourcing HR function Outsourcing can be termed as the allocation of business processes to a particular external service provider as a result of the inability of an organisation to handle all facets of a business process (McCracen and Mclvor, 2013). Once outsourcing has been done, a service provider takes the responsibility of performing the tasks of an organisation as well as maintains its assets. Organisations outsource as a result of lack of expert labour, availability of cheap labour and the feasibility to essence on other fundamental business processes (Sparrow and Braun, 2008). However, although outsourcing has been associated with a number of benefits, there are many challenges that come with outsourcing of human resource. Prior to carrying out the outsourcing of human resource, it is very important for organisations to understand the benefits and challenges that may come with outsourcing (Doellgast and Gospel, 2011). The Business Process Outsourcing industry in Australia has grown over the years. It is estimated to rise at a rate of 2.2% to $31.4 billion next year. An example of an outsourcing company is Capgemini which is an IT company that has formed a partnership with Intel and Microsoft. Microsoft Company has benefited from Capgemini services as it has ensured sustainable growth and development in the company. Microsoft has also outsourced from Infosys Technologies Ltd for its IT operations. The value of the contract was $100 million which brought about revenue for Microsoft worth $1.3 billion in 2010. It is believed that the disadvantages of outsourcing of any element of a business process outweigh the advantages. For instance, one potential advantages of outsourcing of human resource is swiftness and expertise. In many instances, tasks and responsibilities are outsourced to service providers who are specialized in a specific field (Glaister, 2014). Often than not, the service providers have specialized equipment and expertise which enable a specific task to be completed in a short times with enhanced quality output. In addition, an organisation is given an opportunity to concentrate on important processes rather that supporting ones (Sparrow and Braun, 2008). Many companies outsource supporting processes that enable them be able to strengthen the core business process. One of the major factors that determine the results of a specific program is risk-analysis. Outsourcing some elements of human resource function can assist a company shift some tasks to the service provider (Sparrow and Braun, 2008). Since the service provider is a specialized, he can plan and organize the risk-mitigating components faster and better. Outsourcing also increases productivity and performance of an organisation. By doing this, an organisation is able to be more successful and can prepare well for future challenges (Hesketh, 2006). Google have for a long time contracted with global outsourcing service provider GenPact Ltd in an aim of supporting the company’s operation. The company has enjoyed a lot of benefits from the outsourcer company such as cost saving. As mentioned earlier there are many disadvantages and challenges of outsourcing of human resource function. Outsourcing may result to poor performance. A huge number of organisations outsource to limit costs (Economist, 2013). It is clear that reduced costs often bring about poor quality of performance by the outsourced vendors. Any poor performance from the service provider may have a negative impact on an organisation. In addition, in some instances, outsourced human resource personnel lack the understanding of organisational culture (Hesketh, 2006). As human resource recruit workers, the lack of culture understanding may be transferred to new employees. Outsourced service provider also may recruit human resource personnel who do not agree with the culture of the organisation. If the employees recruited by the service provider are not the right fit, an organisation’s success and performance suffers (Sparrow and Braun, 2008). Outsourcing of human resource function may result to information leaks (Sparrow and Braun, 2008). Outsourcing may result to the release of private company information or data. Most at times, in order for an outsourced organisation to offer its services effectively, sensitive and private information about a company’s structure, inner workings as well as product or service information remains unhidden (Sparrow and Braun, 2008). There is always a possibility of the leakage of the information to the public or other companies. Also, after outsourcing to a vendor, managers may give up more control than expected over an organisation’s human resource functions. The organisation also may be too much dependent on the service provider. Being dependant and giving up a lot of control may create a possibility where an organisation cannot carry out its operations without outsourcing (Hesketh, 2006). There are often distance problems when it comes to outsourcing (Sparrow and Braun, 2008). For instance, outsourcing to an offsite location may result to a sense of distance between outsourced labour and the company. While outsourcing offer a number of benefits to an organisation, the disadvantages of outsourcing is often intense and often affect the success of an organisation (Sparrow and Braun, 2008). Conclusion In conclusion, it is important for organisations to consider pros and most importantly the cons before thinking of outsourcing human resource functions from a service provider. Therefore, the essay can conclude that the disadvantages outweigh the advantages and they include poor performance outcomes, distance problem between outsourced labour and the company information leaks to name a few. Although there are a number of advantages of outsourcing, it is evident that the disadvantages are more pronounced and destructive. References Doellgast, V. and Gospel, H. (2011). Outsourcing and international HRM, in Edwards, T. and Rees, C. International Human Resource Management: Globalization, National Systems and Multinational Companies, 2nd ed.Harlow, FT Prentice Hall, 294-312. Economist. (2013). Special report on offshoring and outsourcing, The Economist, 406 (8819), 19 January, centre pages. Glaister, A. (2014). HR Outsourcing: the impact on HR role, competency development and relationships. Human Resource Management Journal, 24, 2, 211-226. Hesketh, A. (2006). Outsourcing the HR Function: Possibilities and Pitfalls. London, Corporate Research Forum. McCracken, M. and McIvor, R. (2013). Transforming the HR function through outsourced shared services: insights from the public sector. International Journal of Human Resource Management, 24(8), 1685-1707 Sparrow, P. and Braun, W. (2008). HR sourcing and shoring: strategies, drivers, success factors and implications for HR, in Dickmann, M., Brewster, C. and Sparrow, P. International Human Resource Management: A European Perspective, 2nd ed., Abingdon, Routledge, 39-66. 2. What do you think is the main HR challenge facing Western multinational firms operating in China, and why? Introduction This essay will analyse the main HR challenge that Western multinational firms are facing when operating in China. One of the major challenges is attraction and retention of good workforce. This essay will clearly show how the challenge affects the working of western multinationals. According to essay, it is to some extent contributed by cultural difference and power distance among Chinese community. The essay will illustrate using various companies that have invested in China including Coca Cola. This essay will therefore discuss the main HR challenge facing western multinational firms that operate in China. HR challenge facing multinational firms operating in China As Chinese economy continues to grow, an increasing number of western multinational companies have strived to internationalize in China (Cooke, 2009). The growth of China is expected to expand by 8.2% this year. Multinational companies are looking for opportunities to expand into China in order to benefit from the growing market in the region. However, there are a number of human resource challenges that face these multinational companies in the Chinese economy. These challenges have led to failure of some companies in the country (Tan, 2009). There has been a challenge that is linked to the attraction and retention of the best pool of workforce (Gutierrez et al., 2012). As the demographic configuration of a given workforce changes, motivation as well as expectations also changes. Human Resource understands fully what is valued by employees. Human Resource also is required to acclimatize their incentives and benefits policies among others since not all workers are motivated by financial compensation. Hiring able employees is just not enough (Gutierrez et al., 2012). Organizations are expected to ensure that their employees are well motivated and are productive which tend to incur additional costs especially in multinational corporations. This is not an easy undertaking. In China, multinational companies are faced with the challenge of retaining and motivating a diverse workforce found in the country (Tan, 2009). In addition, the limited number of human talent in China is a major challenge that faces multinational companies in china. In a research study conducted in 2006 by McKinsey, less than 10% of the total Chinese university graduates had the expertise needed in international organisations operating in China (Cooke, 2009). Attracting and retaining of talented staff for a period of time is a challenge in China. This is because; rising wage inflation in the country especially in the major cities makes it hard to satisfy the salary expectations of the employees. When the salary expectations of the employees are not met, they are easily lured away to other countries by better careers opportunities and high salaries (Cooke, 2009). As more multinational companies expand their operations into China, and with the increasing ability of these companies to pay better salaries, competition for best pool of workforce has increasingly intensified (Tan, 2009). For instance, in the Coca-Cola Company with a branch in China, it is reported that there has been a challenge in finding and hiring middle management level employees. For a number of years now, the company has been struggling with the search for best pool of employees. This has made them decide to seek for some employees outside China in an attempt to be competitive (Gutierrez et al., 2012). Another company that has suffered as a result of the lack of expertise in China is DHL. The company over the last years have relocated some managers from it’s headquarter in order for them to operate in China. China’s cultural distance is a factor that has contributed to talent shortage. Cultural distance from multinational companies’ country of origin is great. This has made it hard for multinational companies to motivate Chinese employees (Cooke, 2009). A number of multinational companies have decided to leave China market since they could no longer navigate through this challenge. For international companies remaining in China, talent management in terms of recruiting, and retaining, motivating and engaging top talent in China (Chmielecki, 2012). In addition, concerning retention and attraction challenges in China, compensation costs for managers have been increasing over the years but the quality of these managers are not enhanced instinctively (Cooke, 2009). For instance, China Business Council reported that almost 62% of companies had increased wages of managers by more than 5% while about 10% of companies had increased wages by 15%. The main reason for this is because in the last few years, China’s economy has been dramatically growing and thus there is no way to find skilled managers and leaders (Walsh and Zhu, 2007). Also, Chinese colleges and universities focus more on student’s academic know-how which encourages students to pass their exams. Nevertheless, multinational companies operating in China have difficulties in finding such individuals since their supply are small in the market and competition is very high (Zhang and Li, 2009). In addition, managerial training initiatives are seldom given to the locals. Shortages of employees may be in terms of lack of creativity, readiness to take risks and leadership inabilities. A wide range of the workforce in multinational organizations is not fully engaged in their tasks due to the size and complexity of these companies (Cooke, 2009). Lack of motivation of employees may lead to poor performance and productivity. Human Resource in any international corporations is expected to build a global employee community (Walsh and Zhu, 2007). In order to retain employees, Human Resource in any company is expected to unify their functions which include recruitment, hiring, retrenchment and compensation policies. Research suggests that multinational organizations with disconnected Human Resource functions can potentially fail as a result of lower retention rate and motivation of employees (Cooke, 2009). Therefore, disconnection of Human Resource function in a multinational company can be the cause of retention and motivation challenge in China. Conclusion In conclusion, the major challenge facing multinational companies operating in China is the ability to engage, motivate and retain the best workforce and the shortage of pool of expertise. This is attributed to power distance and cultural differences. In addition, supply of labour force is small in the market and competition is very high among local and international companies. In order to retain employees, Human Resource in any company is expected to unify their functions which include recruitment, hiring, retrenchment and compensation policies. References Chmielecki, M. (2012). HR challenges in China. Journal of Intercultural Management, 4(3), 49-55. Cooke, F.L. (2009). A decade of transformation of HRM in China: a review of the literature and suggestions for future studies. Asia Pacific Journal of Human Resources, 47(1), 6-40. Gutierrez, B., Spencer. S.M. & Zhu, G. (2012). Thinking globally, leading locally:Chinese, Indian, and Western leadership. Cross Cultural Management, 19(1), 67-86. Tan, J. (2009). Multinational Corporations and Social Responsibility in Emerging Markets: Opportunities and Challenges for Research and Practice. Journal of Business Ethics, 1 (32), 55- 75. Walsh, J. and Zhu, Y. (2007). ‘Local complexities and global uncertainties: a study of foreign ownership and human resource management in China’, International Journal of Human Resource Management, 18(2), 249-67. Zhang, Y-C. and Li, S-L. (2009). ‘High performance work practices and firm performance: evidence from the pharmaceutical industry in China’. The International Journal of Human Resource Management, 20(11), 2331-2348. 3. ‘To what extent is strategic human resource management possible within international firms to overcome problems of coordination and control?’ Introduction This essay will analyse strategic international human resource management (SIHRM) and its concepts. The essay will further analyse how strategic international human resource management is possible to overcome coordination and control within Multinational Enterprise (MNE) companies. The essay will illustrate this using various companies like Coca Cola, Amazon and other companies in US, Japan and India. This essay will therefore analyse the statement, ‘to which extent is strategic IHRM possible within international firms to overcome coordination and control problems’. Strategic IHRM and problems of Coordination and Control The characteristic feature of strategic international human resource management (SIHRM) is the fact that it enhances the performance of an organization through its own people within international borders or globally (Truss, Mankin and Kelliher, 2012). Therefore, for an improvement of an organization to be noticed, both policies and processes that promote HRM should be put to work hence significantly improving the business performance of an organization globally. SIHRM is very significant especially in multinational enterprise (MNE) companies since it enables the management effectively consider the well-being of their staff members regardless of their cultural background (Farham, 2015). It enables the management specifically look into the various issues within the organization with regard to the members. This helps the organization build on their acquisition and the development of their employee skills (Boxall and Pucell, 2011). There is a growing need for strategic international human resource management in MNEs. Rapid global turbulence and technological advancement have fuelled a heighted competitive advantage in business environment (Truss, Mankin and Kelliher, 2012). As a result of this competition, there is a need for strategic flexibility of MNEs. International strategic flexibility highlights the significance of resource flexibility. These resources entail strategic leadership, technological, human personnel and cooperative synergies between a company’s culture and structure (Truss, Mankin and Kelliher, 2012). MNEs are developing their opportunities by striving towards cooperative commitments. The developments in human resource management encompass the influence it can have in the success of business and how HRM can be a fundamental part of business strategy (Farham, 2015). International strategic human resource management is aimed at solving the challenges that face the management of human resources such as coordination and control issues globally (Sparrow and Braun, 2007). It has been seen that integration of human resource management and business strategy has the potential to enhance the management of human resources as well as improvement of performance (Farham, 2015). Organisations also achieve competitive advantage by implementing SIHRM. SIHRM enables an organisation to identify and solve challenges that may be too complex to be comprehended by the top management. It is also possible to develop a motivated pool of employees and design an effective control system in an organisation (Mankin and Kelliher, 2012). In addition, devolution of Human Resource Management has assisted in improving organisational success and effectiveness and prepares managers in the most effective way of making decisions. Developing a successful international workforce is very difficult to be copied by the competitors than technology or a large amount of capital (Truss, Mankin and Killiher, 2012). In addition, how well an organisation manages their human resource throughout the globe can differentiate a success and a failure. Most MNEs have a large pool of global workforce LIKE Coca Cola which had about 123,000 workforces throughout the globe by 2015 (Statista, 2016). Adidas also has a high number of workforces which was at 62,000 by 2015 while IKEA had workforce of 95,000 by 2013 (Statista, 2016). Managing this high number of people requires well put strategic international human resource management. In several international organisations, a significant challenge that has been in existence for a long time is the balancing of the need to coordinate processes distributed in different regions of the world (Braun and Warmer, 2002). There is also the need for different sections to have the control in order to deal with any local issue. Achieving this balance is very hard since there is high diversity level exposed to a multinational company (Farham, 2015). When the parent company’s national culture is different from the different cultures of its subsidiaries, it becomes hard to control and coordinate activities and operations. It is also difficult for these companies to share information, data or technology and also it is hard to promote organisational change or manage conflict between employees in different countries (Boxall and Purcell, 2011). Fortunately, SIHRM has provided a platform that can solve such challenges. For example, SIHRM specialists have the ability to make sure that managers understand the different national cultures around the globe (Farham, 2015). In addition, top executives can advise on the ways in which coordination of functions across the globe can be done. SIHRM is not only the role of human resource department but the top executives and managers are expected to be involved since it is important in boosting competitive advantage (Truss, Mankin and Killiher, 2012). A number of companies have integrated human resource management into business strategies. For instance, according to a study conducted with regard to strategic human resource management in the United States and Japanese market, it has been seen that a huge number of international companies in the United States are engaged in SIHRM more compared to the Japanese companies. Chang, Wikinson and Mellahi (2007) investigated the connection between strategic human resource management and company’s performance. The results concluded that SIHRM had the potential to enhance firm’s performance in any national culture. In addition, Som (2008) sampled 70 Indian Companies in order to establish the impacts of SIHRM on company’s performance. The result showed that SHRM has a positive correlation with performance. Most of these companies had benefited from SIHRM implementation. In addition, SIHRM in multinational companies enable selective hiring and enhance conducive working environment and employees’ performance (Chang, Wikinson and Mellahi, 2007). SIHRM programs foster a collaborative business environment thus contributes to the performance of an organisation. Strategic human resource management enable managers retain employees who are striving towards achieving goals and objectives (Cooke, 2009). For this to be possible, human resource department in any company should coordinate activities in its business. SIHRM makes a company’s culture clear and precise by arguing on the values that strengthen the company. Nevertheless, implementation of SIHRM may be challenging due to a number of factors such as ambiguity about HRM authority and increased indecision about sustainability of workforce effectiveness and flexibility. In addition, the global network instability may be another challenge facing strategic human resource management abilities to enhance firm’s performance (Chang, Wikinson and Mellahi, 2007). Although globalization has enabled companies to adapt to changing conditions and adjustments, SIHRM should bridge the gap of incomplete knowledge about human resource management flexibility. The SIHRM program should be a collaborative effort towards operational outcomes (Cooke, 2009). Therefore, strategic human resource management can be used by multinational companies to overcome coordination and control challenges. For instance, Amazon has integrated its human resource operations with the business strategies in order to solve the low retention incidents seen in the company. This has enabled them coordinate the employees well and motivate them which has increased retention rate significantly. Strategic Human Resource has also benefited companies such as McDonalds, Coca-Cola and Woolworth. McDonalds has effective human resource personnel that have enabled the company to grow and increase in profit. Due to SIHRM, Coca-Cola owns a resourceful organization capability. They have the ability to operate more than 120,000 people as well as provide the accumulation of up to 500 brands of soft drinks in almost 200 countries worldwide. Conclusion In conclusion, there is a need for strategic international human resource management in multinational Enterprises. MNEs are developing their opportunities by striving towards cooperative commitments. The essay has established that strategic international human resource management has an influence on the success of business. The essay has further established that strategic international human resource management in multinational companies bring about many benefits such as enabling selective hiring and enhance a conducive working environment and employees’ performance. It also foster a collaborative business environment thus contributes to the performance of an organisation. Therefore, the essay can conclude that international firms to a greater extent can overcome coordination and control problems through SIHRM. References Boxall, P. and Purcell. J. (2011). Strategy and Human Resource Management, 3rd ed., Basingstoke: Palgrave Macmillan, chs 3 and 4. Braun, W. and Warner, M. (2002). ‘Strategic human resource management in western multinationals in China’. Personnel Review, 31(5/6), 553-579. Chang, Y. Y., Wilkinson, A., & Mellahi, K. (2007). HRM strategies and MNCs from emerging economies in the UK. European Business Review, 19(5), 404-419 Cooke, FL. (2009). ‘HRM in China’, in J. Storey, P. Wright and D. Ulrich (eds), The Routledge Companion to Strategic Human Resource Management. London: Routledge, 447-461. Farnham, D. (2015). Human Resource Management in Context: Strategy, Insights and Solutions, 4th ed. London: CIPD, ch. 5. Mankin, D. and Kelliher, C. (2012). Strategic Human Resource Management. Oxford: Oxford University Press, pp 82-3, Som A. (2008). Innovative Human Resource management and Corporate performance in the Context of Economic Liberalization in India. Thunderbird International Business Review, 49(2): 1-33. Statista. (2016). Coca Colas Number of Employees worldwide. Retrieved from http://www.statista.com/statistics/254562/coca-colas-number-of-employees-worldwide/ Sparrow, P. and Braun, W. (2007). ‘Human Resource Strategy in International Context’, in R. Schuler and S. Jackson (eds.), Strategic Human Resource Management. Oxford: Blackwell (2nd edition), 162-99 Truss, C., Mankin, D. and Kelliher, C. (2012). Strategic Human Resource Management. Oxford: Oxford University Press, ch. 5. Read More