|
Human
Resource Management
Human resource management
(HRM) comprises the entire gamut of knowledge and practices that describes
the nature of work and
regulates employment relations (Bratton & Gold
2000). HRM is also an approach geared towards the achievement of
organisational goals by directing the organisation systems so that human
resources and talents are utilised efficiently and effectively (Mathis &
Jackson 2006). HRM is most considered as a generic term that covers the
entirety of a work-based organization, working terms and conditions, and
representational systems (Boyd 2003). HRM covers the five functional
activity areas, which are: 1) staffing—getting people with the appropriate
knowledge, skills and experience to work in vacant positions in the
organisation with the entire processes broken down into HR planning, job
analysis, recruitment, selection; 2) rewards—development and
implementation of reward systems covering work evaluation, performance
appraisal, benefits; 3) employee development—analysis of training
requirements by identifying the skills and capabilities of employees; 4)
employee maintenance— administering and monitoring of work standards and
organisational policies to develop a competent workforce; and 5) change
and relationship management—monitoring employment relationship issues and
adjusting to changes. (Bratton & Gold 2000) Human resource management
covers the knowledge and experience, approach, and process involved in
establishing, developing and maintaining the relationship between the
company and its human resources based on the premise that the members of
the businesses organization are valuable contributors to the achievement
of the goals of the company.
Human resource management, on
the domestic level, is an inevitable aspect of organisational management
because of the shift in the characteristics of personnel needs of
organizations. Employment requirements are now shifting towards
knowledge-based work requiring highly qualified and skilled people. Due to
this reason, management of valuable human resources becomes the driving
force for most industries. Based on labour economics, this trend implies
that the limited number of highly qualified and skilled people empowers
them to choose the organization where they want to be employed. This
further implies that organizations have to develop and implement human
resource management strategies that are not only appropriate to the
organization but also competitive relative to other organizations
requiring the same level of skills and experience. Thus, on the
organisational level, the primary driver of human resource management
policies is its human resource needs.
International Human Resource
Management
On the global level, the
internationalization of operations results to the addition of HRM policy
drivers involving the processes of locating, sourcing and managing human
resources in different parts of the world that involve the consideration
of the needs of the organisation together with the environmental
influences of the external socio-cultural settings. However, despite the
recognition of the importance of considering these drivers in
international human resource management policies, the effective
integration of these drivers in the HRM policies of multinational
corporations remains nil. According to Lewin and Volberda (2003), the
globalisation of HRM by multinational companies remains in the process of
achieving success. This is because only a number of business firms have
considered and developed effective capabilities to find, select and manage
their global human resources. In addition, Rugman and Verbeke (2004) also
provide that despite the benefits of internationalising business firms,
multinational companies retain the concentration of workforce and assets
in their home countries or region. This supports the
contention of Ferner
and Quintanilla (1998) that there are only a few companies operating as
global and stateless firms governed only by competitive rules and there is
a wide gap between previous and new companies actually internationalising
their HRM policies. Nevertheless, the greater progress is expected to
occur in the near future. According to the UNCTAD (2004), there are 63,000
multinational corporations influencing trade patterns. The operations of
these companies account for two-thirds of total world trade but the top
one hundred business firms under this category contribute only 14 percent
to world sales, 12 percent to aggregate assets, and 13 percent to total
employment.
Thus, internationalising HRM
policies involves understanding and investigating of the drivers of
international HRM, the integration of these drivers into the HRM policies
of the company, and the actual implementation of these policies in human
resource management activities.
Drivers of International
Human Resource Management Policies
According to Schuler and Tarique (2007), policy drivers in
international HRM are encompassed by two objectives. One is the functional
realignment arising as response to global operations and the other is the
progressive development of global capabilities within business firms. Chen
and Wilson (2004) contend that the
optimisation and standardisation of HRM internationalisation balanced with
localisation of policy implementation constitutes the ultimate HRM policy.
Concurrently, the authors identified four drivers of international HRM,
which are 1) expertise; 2) consistency; 3) resource power; and 4)
experience in internationalisation. The first and last drivers fall under
global capabilities while the second and third drivers are encompassed by
function realignment.
In relation to functional
realignment, there are certain factors that business firms seek to
coordinate, by building linkages between the geographically scattered
business units; and control, by regulating the linkages between actual and
targeted functional activities (Kim, Park & Prescott 2003). Malbright
(1995) provides that globalisation happens at the functional level instead
of the firm level so that it is through the integration of functional
level factors that multinational business organisations are able to
actualise global HRM activities. Based on the consideration of functional
level of policy considerations, there arise five specific factors that
drive the HRM strategy of multinational companies, which are 1)
efficiency; 2) information exchange or organisational learning; 3)
international provisions; 4) convergence of key business processes; and 5)
localisation of HRM policies (Brewster, Sparrow & Harris 2005).
With regard to the
progressive development of global capabilities, efficiency involves the
pursuance of three core HRM policy driving mechanisms for globalising
companies. These are 1) focusing on collective service structures; 2)
enabling of the different HR processes on both the regional and global
scale; and 3) pursuing global venues of excellence. These policy drivers
manifest in various reconfiguration activities that influence
international HRM. Previously, the direction of globalising business is
towards the involvement of HR professionals to deal with firm managers
taking charge of overseas positions. The focus is commonly on the need to
determine the specific competencies and skills determined as important in
becoming an effective international manager. At present, international HRM
shifted to the necessity of having a different international HRM function
covering the group of dedicated managers and internationalising all basic
HR processes of the organisation. This development ensures that HRM policy
applies to the diversified and global workforce. This is achieved by
making sure that the HR professionals involved in domestic HR environments
should be flexible enough to be able to work in various cultural settings
and diverse employment markets. (Schuler & Tarique 2007)
Although
functional alignment focuses on the working of the organization while
global capabilities pertain to the people engaged in HRM functions, both
are closely linked to the specific policy area of global staffing. This is
because the definition of global resources and expatriate skills and
competencies determines the viability of international HRM policies.
Global staffing previously focused on the key or top management positions
in headquarters and the subsidiary locations by mixing policies instead of
a directed focus on the globalization of strategy (Harzing 2004). The
present direction of best practices in global HRM policy determination
revolves around drawing and selecting expatriates, international managers,
and talent managers in the mother company together with the creation of
flexible business-related travellers, virtual business teams, and
inpatriates (Scullion & Collings 2006) However, with the expansion and
complexity in international HRM, the categorisation of international
employees under expatriates should be further expanded to include the
categories of contract expatriates, foreign posting assignees on a short
or medium term basis, permanent business teams under the global managers,
international commuters, employees holding functions during business trips
with long durations, international transferees who move among the various
subsidiaries, virtual employees actively involved in international project
teams, specially skilled employees holding posts in the satellite
companies, voluntary movers or those living in another country willing to
work for a multinational firm, immigrants drawn by the national market of
the host country, and local employees but fundamentally dealing with
international customers. (Briscoe & Schuler 2004)
With these
developments, global recruitment and sourcing shifted to focusing on the
changing structure and functions of international HRM so that HR workers
have to be flexible in handling the wide ranging options arising from
global sourcing. With the globalisation of HRM practices, organisations
need to consider the challenges of developing a certain level of
consistency by engaging in either optimisation or standardisation of HR
functions in the mother and satellite business units placed across
different countries to ensure that every business unit is aligned with the
HR policies and the corresponding techniques and tools in obtaining
candidates from the global labour market while the individual business
units maintain local responsiveness and approach customisation. (Wiechmann,
Ryan & Hemmingway 2003)
Links between International
and Strategic Human Resource Management
The links
determined from the definitions and conceptualisations of strategy and
human resource management, were derived based on the manner that
international and strategic human resource management relate in the
context of the quest of globalising firms to achievement business goals.
The first
link involves the necessity of matching business activities to the
resources of the mother business and its satellites in order to determine
the capability of the company to support its planned business activities
increasing the likelihood of actualizing the business activities
(Armstrong 2000).
Determining the
capabilities of the company includes the consideration of the human
resource capabilities of headquarters and the satellite business units,
which may be similar in some aspects but differ in other areas. Learning
this information involves the intervention and coordination of human
resource management personnel in acquiring knowledge over the number of
people involved in the organizational units, the concentration of
deployment of people to the different working units, and the collective
capabilities of the business groups. After learning information over these
factors, decision-makers can then determine whether the planned overall
business activity stands to receive sufficient support from the members
and different units of the organization. It is only when it has been
determined that the business activity is fully covered by the aggregate
capabilities of existing human resources that the company is ensured of
the viability of its endeavours. However, if the capability of the
organization cannot sufficiently support the viability of the business
activity, then the company has to decide whether to reconsider or abandon
the project or enhance the capabilities of its human resource. The process
of planning, evaluating, and reconsidering the consistency between the
human resource capabilities of the company and the project goals is
strategic HRM. This means that strategic and international human resource
management meets at the point that the business firm is matching its human
resource capabilities in the different contexts of its business units with
its business objectives.
The process of
matching contextual human resource capabilities with business objectives
creates a complementary relationship between strategy and human resource
management. On one hand, strategy provides the plan, guidance and the
steps through which the company is able to direct the activities of its
human resource towards the achievement of financial and competitive goals.
It is strategy that links human resource management with the overall
objectives of the company. On the other hand, human resource management
assures the business of accomplishing its planned activities through the
internationalisation-directed management of human resources inevitable to
the survival of the organizational units. Human resource management
ensures that the members of the organizational units are duly informed of
their role in the organization and motivated to develop commitment to the
accomplishment of their roles. This means that the link between strategy
and human resource management lies in the areas and the ways that both are
able to complement the other towards the financial viability and/or the
establishment of a competitive advantage by the firm in the industry and
international market where it belongs.
The second
link is the contribution of strategy towards the organisational
consciousness of performance, centred towards the sources of profitability
(Armstrong & Barron 2002). Human resource management on its own is
indirectly linked to the quest for profitability. This is because human
resource management focuses on ensuring the efficient organization and
utilization of human resources with the result comprised of the
achievement of the desired level of output from the business units. The
desired output only pertains to the existing profitability targets of the
company without identifying other areas of profitability. Moreover,
international human resource management involves the balancing of the
interests of the mother company and the different business units
concurrent with the balancing of the interests between top management at
headquarters and the head managers of the business units. This is
necessary to facilitate a good and aligned working relationship between
the parties in order for the organisation to meet its business goals and
the different business units to obtain their specific needs to effectively
contribute to the company. The process of balancing interests and
facilitating good management alignment relations support the current level
of profitability but it does not necessarily open new sources of
profitability or ways of enhancing the current level of profitability of
the company. Strategy contributes to the redirection of human resource
management to give greater consideration for sources of profitability.
Strategy is geared towards
improvements in the operations of the mother company and its business
units and the determination of future sources of profitability. This
involves the development of a plan of action directed towards the
financial and competitive goals of the company followed by the assessment
of the viability of the plan based on the capabilities of human and other
resources, with the result determining the implementation of the plan.
Strategy compared the company’s current status with its greater potential
for future realization. As such, strategy is able to fill-in the
limitations of human resource management in considering future overall
financial and competitive goals of the organisation.
This means that the link
between international and strategic human resource management is
determined by the contribution of strategy towards directing human
resource management policies of globalising firms in the direction of
enhancing existing and new sources of profitability particularly from the
actual and potential capabilities of the human resources of the company.
This further implies that strategic human resource management involves
directing current internationalised human resource capabilities towards
the achievement of present financial and competitive goals and the
realisation of planned sources of profitability.
The third link is the recognition that
strategy cannot be separated from implementation (Cappelli 1999). In
modern international business organizations, the importance of human
resource is enhanced by the recognized varying levels of shifts from
industrial to the information age in different business geographic
contexts. In general, this means that although the scale of operation of
most industries would decrease this is replaced by greater reliance upon
human resource competitiveness. The change in organizational direction
means that the success of plans for improving the organization depends
upon its implementation by the different business units. Despite the
rationality and viability attached to a plan but without the cooperation
of the organisation’s business units, the project would not succeed. The
link between strategic and international human resource management lies in
the ability of strategy to direct the efforts of human resources towards
the desired change within the organisation in considering different
functional contexts of the business units.
Thus, strategy
ensures that there is optimisation and standardisation of international
human resource policies but considering the different drivers determining
the effective HR functions of various business units operating in
different contexts. The key then is balancing the unification of the HR
policies of the entire organisation with the different settings in the
geographically located business units.
Conclusion
Supporting the internationalisation of business
firms requires the balancing of standardisation of HR policies across the
entire organisation with the customisation of HR functions, determined by
the different environmental contexts of the business units located across
different countries in the world. Preliminary to the balancing of
standardisation with customisation is the determination and understanding
of the different factors that drive internationalised human resource
management policies. Generally, there are two internationalisation drivers
of HRM policies, which are functional realignment and global capabilities.
Under functional realignment are the specific drivers of consistency,
resource power, efficiency, information exchange, internationalisation
provisions, convergence, and localisation while under global capabilities
include service structure focus, HR process enabling, global excellence
venue pursuance, expertise, and experience in internationalisation. With
the understanding of these drivers, HRM policy would be able to offer
standard functions and practices but allowing enough room for the
customised alignment of these policies into the HR functions of the
satellite business units. In application, it is also important to consider
the role of HR managers in the business units who hold key information
necessary in policy alignment. HR managers in the business units should be
considered by HR management at headquarters as equals to achieve their
highly-motivated cooperation in the process.
The internationalisation of human resource
management is significantly linked to strategy HRM because of their
complementary relationship. On one hand, internationalisation in itself
comprises a strategy geared towards the improvement of business
operations. On the other hand, strategic HRM allows internationalisation
by encouraging individual business units to operate profitably by
implementing HR policies geared towards existing and new profit sources.
|
