IHRM-Swapnil Mali


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IHRM-Swapnil Mali

  1. 1. An Essay forEC30013 : International Human Resource Management Submitted To Dr. Paul Seaman University of Dundee Submitted On 9 March, 2012 By Swapnil Mali 120004897
  2. 2. Contents Page Number1. Introduction 12. Business environment and HRM 13. Globalization and changing business environment 24. Changing business environment and HRM 35. New views of HRM 36. Conclusions 57. References 6
  3. 3. 1. IntroductionThis essay is about the current business environment which encourages firms to take a more‘international’ view of HRM. Any firm must understand what HRM means, what are thedeciding factors while taking decisions. According to bookish definition, HRM is the collectionof all the activities (like staffing, training and development, remuneration, performancemanagement, etc) which are performed to achieve maximum utilization of the human resources(Dowling, E & Festing, 2011).Current business environment has been affected a lot by globalization. Due to market open ups,foreign direct investments; new technologies and transportations firms are able to take theirbusiness globally (Mani, 2006). But when any firm enters into new market, it must follow thelocal cultures in that market (culture includes both in public as well as in business environment).There is a possibility of business failure if firm denies these changes. E.g. Walmart announced itsexit from Germany in 2006(Kottolli, 2006). According to Laurent (1986) “the challenge faced by the international human resourcemanagement is to solve a multi-dimensional puzzle located at the crossroad of national andorganizational cultures”. The purpose of this essay is to throw light on new business environmentand changing views of HRM.2. Business environment and HRMBusiness environment and HRM has relation in-between. It has been developed over the years. Itis important to understand what exactly business environment means.Business environment which is also referred as operating environment includes all factorsaffecting firm’s operations. This includes customers, competitors, suppliers, distributors, industrytrends, substitutes, regulations, government activities, the economy, demographics, social andcultural factors, innovations, and technological developments (Qunatumiii: CompetitiveIntelligence Glossary, 2012).Managing business may be an art or a science but at the end of the day, the firm is run by humanbeings rather than machines. There are many examples which support importance of HRM inEC30013: International HRM Page 1
  4. 4. business environment. HRM was not developed few days ago; it has a history over the years.There were many experiments which proved relation between productivity, growth and HRM.Henry Fayol proved with his experiments that if human resource is utilised with scientificmanner, productivity can be increased to a large extent (Paul, 2009). A very famous theory ofElton Mayo describes the importance of human relations in productivity as it proved that it’s notthe money but the social needs of workers which can improve performance (Tutor2: People-Theories of motivation, 2012). Niklas Luhmann did come with base of international view ofHRM. According to his theories rather than thinking of highly unrealistic assumption, firm mustthink about the actual facts and make human resource management more social to overcomeindividualistic view of workers (Paul, 2009). This is enough to say that view of HRM ischanging over the years. It has widen more due to globalization.3. Globalization and changing business environmentGlobalization is a term that describes the interaction between different countries worldwideleading to economic, political, technical and cultural development (Hub pages: Definition ofglobalization, 2010).Multinational companies are more than just the company operating in manycountries having headquarter at London or New York. Now all the countries have potentialmarket to tap. Due to the organizations like WTO (World Trade Organization), NAFTA (NorthAmerica Free Trade Agreements) barriers for business have been reduced to large extent (Globalissues- International Trade, 2010).This encourages firms to take their business worldwide withthe least risk. Some generally observed responses by business due to globalization are as follows(Turley, 2009). • Competing with not just rivals but also with the new business environments. • Highly appreciated innovative work. • Global policy making. • Multinational and multi cultured management. • Everybody trying for economy of scale.This does not just affect the production but also affect the buying behavior of customer. Thecustomers now a days demand for more quality products. Tastes of products have changed. It’snot like that only MNCs are thinking globally, local firms also need to think about the changes inEC30013: International HRM Page 2
  5. 5. buying behavior and need to change accordingly to sustain in the market (Tutor2u: Globalizationand business, 2012).4. Changing business environment and HRMGlobalization allows firm to go for business process outsourcing or greater mobility of humanresources across countries (Tutor2u: Globalization and business, 2012).Parallel to this change inbusiness environment, view of HRM also needs to be changed. Though many firms have HRMviews as specific to countries but globalization has become a challenge for it.E.g. Indian company starts its business in USA. What will be the salary of a person who is sentabroad from his home country.HRM must ensure that employee possesses sound knowledge and skill but due to globalization,adapting to culture also becomes an important issue. Also, lots of mergers and acquisitions aretaking place nowadays. In this environment, firm should ensure that employee is not feelinginsecure and able to continue with same or greater productivity (Krishna, 2009).Problems withthe expatriates also becomes a headache. Firm must ensure about it before internationalassignment (Global issues- International Trade, 2010). As huge amount of money has been spentby firm on expatriates, it must be a success. So HRM also need to take care of family, childrenand their education. Since the MNCs are based worldwide, employees get huge exposure and thiscreates a demand for them. Because of swapping of jobs for more money, higher attrition ratehas become a challenge for HRM (PTI, 2012).5. New views of HRMNew entrepreneurs are daring to go into market with high capital investments nowadays. Topreason of early failures of business is poor execution of plans (Bradbentz, n.d.). Lack ofcommunication, misunderstandings, and absence of team work are the main reasons for this.HRM should be really concerned about the commitment and team work between the employees.Though firms are operating internationally, they need to think about local culture, behaviors ofthe new market. Firms nowadays believe in Rene Dubos’s (1994) theory “Think globally and actlocally”. New views of HRM are broader and global. But the way of execution with availablehuman resources is a key of success.EC30013: International HRM Page 3
  6. 6. Due to globalization and reduced barriers between countries firms now are able to recruitdiversified talent from all over the world. This talent is from different part of world withdifferent skills and knowledge. But most important is that they have different culture as well. Soit’s a new task for HRM to build relation with all and make them comfortable in workingenvironment so that they feel like family and help to produce better quality work.As people come from all over the world, it’s necessary to study the stereotypes. It’s not todiscriminate them but to understand them and help them in appropriate manner to adapt withnew environment as soon as possible. More concern towards the stake holder has become a keyof newly changed HRM. Especially talking about the expatriates, the incentives given to themare more intellectual rather than monetary one. Greater involvement of employees in design andexecution helps to keep them attached to the firm, also it helps to increase self motivation inemployees.High skilled workers are treated as assets of the firm. Therefore more investments towards thetraining and developing programs take place all over the world. Also significant increase can beobserved in the number of management development programs. Firms also tend to train anddevelop workers in wide variety of skills, it is referred as “Multiskilling” or cross training(Dutkowsky, 2012).Firms expect that the employees should take initiative and come with newsolutions. They should grab the new technologies from all over the world. All of these will helpto improve decision making capability of the employees. This ultimately will lead to improveand speed up the whole developing process.More focus has been given on the two-way communication, information sharing, and problemsolving techniques. These policies can help in better performance via self motivated employees.Last but not the least, as the firms are operating worldwide, communication skill becomesessential for all. Much effort has been put to develop this skill to avoid misunderstanding anddevelop better communication.EC30013: International HRM Page 4
  7. 7. 6. ConclusionsFrom the discussion above, some conclusions can be drawn which are as follows-1. Business environment and HRM are developing parallel to each other.2. As the businesses are developing worldwide, HRM is also going with worldwide approach.3. Success of the MNCs is now dependent on the performance of HRM in managing the humanresources across the border efficiently.4. Development of communication skill of employees helps to achieve better communication andavoid misunderstanding.5. International approach of HRM will help firms to increase their productivity and help tosustain in the new business environment.EC30013: International HRM Page 5
  8. 8. 7. ReferencesBradbentz, n.d., Why do so many new business fail , viewed 7 March 2012,<http://www.squidoo.com/starup_failures>Dowling, E & Festing, 2011, International human resource management,Thomson,UkDutkowsky, S, 2012, Trends in Training and Development - THE NEW ECONOMY, TRAININGIN U.S. COMPANIES, WHO DOES THE TRAINING IN CORPORATIONS, viewed 7 March2012, <http://careers.stateuniversity.com/pages/852/Trends-in-Training-Development.html>Eblen, 1994, Think globally act locally, viewed 7 March 2012,<http://capita.wustl.edu/ME567_Informatics/concepts/global.html>Global issues- International Trade, 2010, viewed on 6 March 2012,< http://www.americans-world.org/digest/global_issues/intertrade/environment.cfm>Hub pages: Definition of globalization, 2010, viewed 7 March 2012,<http://hotbabefatchicks.hubpages.com/hub/Definition-of-Globalization>Kottolli ,A, 2006, Trans-cultural Business Failure: Wal-Mart Exits Germany, viewed 6 March,2012, <http://arunkottolli.blogspot.com/2006/08/trans-cultural-business-failure-wal.html>Krishna, C, 2009, Globalization and its impact on business environment, Viewed on 7 March2012, <http://www.indianmba.com/Faculty_Column/FC1057/fc1057.html>Laurent , 1986, Human resource management, viewed 6 March 2012,<http://www.mendeley.com/research/crosscultural-puzzle-international-human-resource-management/>Mani, 2006, Human resources – Impact of globalization on HR, viewed 6 March 2012,<http://en.allexperts.com/q/Human-Resources-2866/IMPACT-GLOBALISATION-HR.htm>Paul, 2009, Classical and neo-classical theories of management, viewed 7 March 2012,<http://classnotesmadeeasy.blogspot.com/2009/07/classical-and-neo-classical-theories-of.html>EC30013: International HRM Page 6
  9. 9. PTI, 2012, Attrition rate at front-end sales level is a challenge: PepsiCo, 2012, viewed 6 March2012,< http://articles.economictimes.indiatimes.com/2011-07-22/news/29803422_1_attrition-rate-big-challenge-pepsico-india>Qunatumiii: Competitive Intelligence Glossary, 2012, viewed 6 March 2012,<http://www.quantum3.co.za/CI%20Glossary.htm>Turley, J, 2009, Redrawing the map- Globalization and the changing world of business, viewed7 March 2012, <http://www.ey.com/GL/en/Issues/Business-environment/Redrawing-the-map--globalization-and-the-changing-world-of-business---Five-business-responses-to-globalization>Tutor2u: Globalization and business, 2012, viewed 6 March 2012,<http://tutor2u.net/business/external/globalisation_effects.htm>Tutor2: People- Theories of motivation, 2012, viewed 6 March 2012,<uhttp://tutor2u.net/business/gcse/people_motivation_theories.htm>EC30013: International HRM Page 7