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Managing Global Human Resources Essay Research Paper

Managing Global Human Resources Essay, Research Paper


The environment in which business competes


is rapidly becoming globalized. More and more companies are entering international


markets by exporting their products overseas, building plants in other


countries, and entering into alliances with foreign companies. Global competition


is driving changes in organizations throughout the world. Companies are


attempting to gain a competitive advantage, which can be provided by international


expansion. Deciding whether to enter foreign markets and whether to develop


plants or other facilities in other countries is no simple matter and many


human resource issues surface. (Noe, Hollenbeck, Gerhart, and Wright; 534)


Doing business globally requires that adaptations


be made to reflect cultural and other factors that differ from country


to country and from continent to continent. The nature and stability of


political systems vary in character and stability, with contracts suddenly


becoming unenforceable because of internal political factors. Human resource


regulations and laws vary among countries in character and detail. In many


countries in Western Europe, laws on labor unions and employment make it


difficult to reduce the number of workers because required payments to


ex-employees can be very high. Equal employment legislation exists to varying


degrees. In some countries, laws address issues such as employment discrimination


and sexual harassment.


Cultural forces represent another important


concern affecting international human resource management. Culture is composed


of the societal forces affecting the values, beliefs, and actions of a


distinct group of people. (Mathis & Jackson, 171) Cultural differences


certainly exist between nations, but also between countries. Getting individuals


from different ethic or tribal backgrounds to work together may be very


difficult in some parts of the world. Culture is important to human resources


for two reasons. It determines the other factors ? political-legal, economic,


and education-human capital factors. Culture affects human capital, because


if education is greatly valued by culture, then members of the community


try to increase their human capital. (Noe, Hollenbeck, Gerhart, and Wright;


537) Economic conditions vary also from country to country. Many lesser-developed


nations are receptive to foreign investment in order to create jobs for


their growing populations. In many developed countries, especially in Europe,


unemployment has grown, but employment restrictions and wage levels remain


high.


The internationalization of U.S. corporations


has grown than the internationalization of human resource management. International


human resource management differs from domestic human resource management


in several ways. In the first place, it places a greater emphasis on functions


and activities such as relocation, orientation, and translation services


to help employees adapt to a new and different environment outside their


own country. Assistance with tax matters, baking, investment management,


home rental while on assignment, and coordination of home visits is also


usually provided by the human resource department. Larger corporations


have a full-time staff of human resource managers devoted to assisting


globalization. For example, McDonald?s has a team of HR directors who travel


around the world to help country managers stay updated on international


concerns, policies, and programs. The human resource department in an overseas


unit must be particularly responsive to the cultural, political, and legal


environments. Companies such as Shell, Xerox, Levi Strauss, Digital, and


Honeywell have made a special effort to create codes of conduct for employees


throughout the world to make certain that standards of ethical and legal


behavior are known and understood. (Sherman, Bohlander, and Snell; 633)


A growing number of organizations that


operate only within one country are recognizing that they must change and


develop a more international perspective. Organizations may pass through


three stages that are import-export (national) companies, multinational


enterprises (MNE), and global organizations. National companies do not


become global companies immediately. Involvement in international HRM depends


greatly on a company’s phase of globalization. Import-export firms. Firms


in the first phase of globalization simply move products across national


boundaries. The firm does not employ people in other countries, except


a few managers responsible for negotiating business agreements. These agreements


usually involve buying or selling complete products or services. Import-export


firms need to understand their trading partners’ cultures and usually must


overcome communication barriers to negotiate agreements. Negotiations are


usually done by expatriate representatives, but expatriates are not employed


as extensively by import-export firms as by multinational enterprises.


HR policies and practices remain relatively unchanged from the company’s


traditional home-base practices. (HR Magazine,06-01-1995)


Multinational enterprises (MNEs). Firms


in the second phase of globalization have strategic corporate units located


in foreign countries. Part of the firm’s goods or services may be produced


in one country, then possibly moved to another country for additional assembly,


and ultimately distributed to other countries where they are sold by employees


of the firm. MNEs typically make extensive use of expatriate managers who


are sent from headquarters to oversee foreign operations. Expatriate managers


play important strategic roles. They coordinate between subsidiaries and


headquarters, implement strategy, ensure the quality and effectiveness


of organizational control systems, and manage global information systems.


They also gain expertise in international business skills that are critical


to ensuring that top executive positions are filled by competent replacements


with the necessary international experience and perspectives. Multinational


enterprises hiring workers in foreign countries must create and administer


HR practices adapted to each country. In addition to hiring, some of the


most significant HR issues for MNEs are training a foreign workforce, complying


with the host country’s employment laws, monitoring labor costs, selecting


expatriates, and helping them and their families succeed in the new assignment.


(HR Magazine, 06-01-1995)


Global firms. Firms in the final phase


of globalization have strategic corporate units in multiple countries that


interact with both headquarters and each other. Specialized functions may


be performed in different countries – for example, engineering in one country,


research in another country and production in yet another. People and products


are moved extensively across national boundaries to meet company demands.


Global firms make moderate use of expatriate managers. Other professional


employees may also be asked to relocate. Expatriate managers provide leadership


and continuity in the various divisions. These foreign assignments help


the managers in their career development, with one or more foreign assignments


considered essential for progression to higher levels of leadership.


When organizations expand to other countries,


they must develop operations and staff the operations in those countries.


Large multinational enterprises and global organizations typically employ


individuals from throughout the world. International employees can be placed


in different classifications. An expatriate is an employee working in a


unit or plant that is not a citizen of the country in which the unit or


plant is located but is a citizen of the country in which the organization


is headquartered. A host-country national is an employee working in a unit


or plant that is a citizen of the country in which the unit or plant is


located but where the unit or plant is operated by an organization headquartered


in another country. A third-country national is a citizen of one country,


working in a second country, and employed by an organization headquartered


in a third country.


Each of these individuals present some


unique human resource management challenges. Each is a citizen of a different


country, different tax laws and other factors applied. Human resource professionals


have to be knowledgeable about the laws and customs of each country. They


must establish appropriate payroll and record-keeping procedures to ensure


compliance with varying regulations and requirements. Many MNEs use expatriates


to ensure that foreign operations are link

ed effectively with the parent


corporations. Expatriates are used to develop international capabilities


within an organization. Experienced expatriates can provide great talent


that can be tapped as the organization expands its operations more broadly


into more countries. Using host-country nationals is important if the organization


wants to establish clearly that it is making a commitment to the host country


and not just setting up a foreign operation. (Mathis & Jackson, 173)


Host-country nationals often know the culture, the politics, the laws,


and how business is done better than an outsider would. The use of third-country


nationals is a way to emphasize the global approach that is being taken.


These individuals are used to handle responsibilities throughout a continent


or region.


Employee recruitment in other countries


is subject to more government regulations than it is in the United States.


Regulations range from those that cover procedures for recruiting employees


to those that govern the employment of foreign labor or require the employment


of the physically disabled, war veterans, or displaced persons. (Sherman,


Bohlander, and Snell; p. 634) All countries have work-permit or visa


restrictions that apply to foreigners. A work permit is a document issued


by a government that grants the authority to foreigners to find employment


in that country. Foreign workers invited to come to perform needed labor


are the guest workers. The employment of foreigners may involve lower direct


labor costs, but indirect cost such as language training, health services,


recruitment, transportation and so on may be substantial.


The selection process for an international


assignment should provide a true picture of the life, work, and culture


to which the employee may be sent. Human resource managers should prepare


a comprehensive description of the job to be done. The description should


note responsibilities that would be unusual in home country. The responsibilities


might include negotiating with public officials; interpreting local work


codes; and responding to ethical, moral, and personal issues such as religious


prohibitions and personal freedoms. The selection process should emphasize


different employment factors, depending on the extent that one would have


with the local culture and the degree to which the foreign environment


differs from the home environment. If a candidate for expatriation is willing


to live and work in a foreign environment, and indication of his or her


tolerance of cultural differences should be obtained. The finding employees


who can meet the demands of working in a foreign environment is one of


the toughest jobs for many organizations. Many companies have been hesitant


to send women on overseas assignments. Executives assume that women do


not want international assignments, but the reality is that the rate is


equal to that of men. It is also important that companies are increasingly


using transnational teams to conduct international business. These teams


are especially useful for performing tasks that the firm as a whole is


not yet structured to accomplish. They might be used to transcend the existing


organizational structure to customize a strategy for different geographic


regions, transfer technology form one part of the world to another, and


communicate between headquarters and subsidiaries in different countries.


The fundamental task in forming a transnational team is assembling the


right group of people who can work together effectively to accomplish the


goals of the team. Many companies try to build variety into their teams


in order to maximize responsiveness to the special needs of different countries.


Employees that work in international area


face special activities as orientation and training, continuing employee


development, and readjustment training and development. The orientation


and training that expatriates and their families receive before the international


assignment begins include work adjustment, interaction adjustment and general


adjustment such as language, culture, history, and living conditions. Career


planning and continued involvement of expatriates in corporate employee


development activities are essential. One of the greatest deterrents to


accepting foreign assignments is employees? concern that they will be out


of sight and out of mind. If businesses are to be managed effectively


in an international setting, managers need to be educated and trained in


global management skills. For example, Levi Strauss has identified the


following six attributes of the global manager. Those are the ability to


seize strategic opportunities; ability to manage highly decentralized organizations;


awareness of global issues; sensitivity to issues to diversity; competence


in interpersonal relations; and skill in building community. (Sherman,


Bohlander, and Snell; 640)


Organizations with employees in many different


countries face some special compensation pressures. Variations in laws,


living costs, tax policies, and other factors all must be considered in


establishing the compensation for expatriate managers and professionals.


Even the value of the U.S. dollar can be tracked and adjustments made as


the dollar rises or falls in relation to currency rates in other countries.


Add to all of these concerns the need to compensate employees for the costs


of housing, schooling of children, and yearly transportation home for themselves


and their family members. Many multinational firms have compensation programs


that use the balance-sheet approach that provides international employees


with a compensation package that equalizes cost differences between the


international assignment and the same assignment in the home country. Unlike


the balance-sheet approach, a global market approach to compensation requires


that the international assignment must be viewed as continual though the


assignment may take the employee to different countries for differing lengths


of time.


The nature of employee and labor relations


varies form country to country. When international operations are considered,


concerns related to health safety, and security must be evaluated. It is


important to understand the applicable labor-management laws, regulations,


and practices before commencing operations in foreign countries. With more


and more expatriates working internationally, especially in the less-developed


countries, health and safety issues are arising and addressing these issues


is part of the human resource role. Another consideration is provision


of emergency evacuation services. Many global firms purchase coverage for


their international employees from an organization that provides emergency


services, such as International SOS, Global Assistance Network, or U.S.


Assist.


The role of unions differs from the unions


in the United Stated to the unions in other countries. It depends on many


factors, such as the level of per capita, mobility between management and


labor, homogeneity of labor and level of employment. Labor relations in


Europe differ form those in the United States in certain characteristics:


In Europe, organizations negotiate the agreement with the union at the


national level though the employer association representing their particular


industry. Unions in many European countries have more political power than


those in the U.S., with the result that when employers deal with the union


they are dealing indirectly with the government. There is a greater tendency


in Europe for salaried employees to be unionized.


The global expansion of IHRIM is in direct


support of IHRIM?s mission statement:


?To be, internationally, the leading association


enabling customers to achieve strategic objective through the integration


of information technology and human resource management.? (IHRIN, 05-29-2000)


WORK CITED


Cherrington, David J., Laura Zaugg Middleton.


An Introduction To Global Business Issues. http://www.elibrary.com


HR Magazine. 06-01-1995


Internet available:


http://www.ihrin.org/affiliates/index.cfm


Mathis, Robert L., John H. Jackson. Human


Resource Management. Essential Perspectives. 1st edition. South-Western


College Publishing. Cincinnati, 1999.


Noe, Raymond A., John R. Hollenbeck, Barry


Gerhart, and Patrick M. Wright. Human Resource Management. Gaining


A Competitive Advantage. 3rd edition. Irwin McGraw-Hull. Boston,


2000.


Sherman, Arthur, George Bohlander, and


Scott Snell. Managing Human Resources. 11th edition. South-Western


College Publishing. Cincinnati, 1998.

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