- International Human Resource Management, Chapter 3
- What are the issues of standardization and localization in general for MNEs and how do they particularly manifest themselves in IHRM activities?
- What are the stages a firm typically goes through as it grows internationally and how does each stage affect the HR function?
- Country of origin can strongly influence a firm’s approach to organization structure. As MNEs from China and India internationalize, to what extent are they likely to differ from that observed for Japanese, European and US MNEs?
Human Resource Management from a Global Perspective
Understanding and managing human resources in the global market has become crucial in today’s and future business environment, hence the topic of International Human Resource Management (IRHM). Culturally appropriate approaches to handling human resources have emerged as a critical procedure to support organizational growth across national borders. Generally, IHRM is defined as a strategy for managing HR processes, policies, and practices utilized by multinational companies to effectively meet their strategic objectives at the local and international levels.
Standardization involves implementing similar policies, procedures, and laws in various regions. This may enhance cost-saving culture, standardization, and effectiveness. On the other hand, elements from the institutional and local cultural environment facilitate localization. So, coming to the point of argument, it may be asserted that the culture of the visitor country restricts the IHRM (Chung & Sparrow, 2024). Moreover, social standardization of essential operations requires effective standardized processes. However, it significantly varies depending on the cultural environment, a significant issue with MNEs. All this aims to appease a culture that centers on interpersonal and social associations, which balance extrinsic and intrinsic motives.
The business’s success is highly dependent on how the employees are supported. Therefore, shaping HR policies to support cultural needs ensures that the company chooses people with the necessary talents and who mesh nicely with its culture. Besides the cultural aspect, the other issue that has dramatically affected the policies and HR management is an organization’s growth. Before an organization is considered to fit the global market, it goes through various stages. Domestic is the first stage in which every organization starts (Krishnan & Singh, 2011). At this level, the HR functions are simple. HR management is only responsible for a specific citizen.
In most cases, the company is developed by entrepreneurs who are citizens of the country. Therefore, acquiring labor is easier because they know the country’s labor laws. Secondly, there is the export stage, in which HR is concerned with foreign regulatory compliance and staffing for export markets. The transition from the domestic to the export stage can be tricky because HR must comply with the laws of foreign countries. The best approach is to localize the policies to ensure they match the culture. When the business reaches the multinational stage, HR must manage a heterogeneous staff in several nations while emphasizing coordination and integration. HRM must create rules that adhere to every nation’s labour laws and regulations. The final stage is global, with personnel management, leadership development, and fostering a worldwide company culture being the key topics HR prioritizes.
Lastly, the country of origin can significantly influence the organizational structure of multinational companies (MNEs). Consider how cultural elements like deference to authority and hierarchy can affect these arrangements. Due to their domestic business settings and governance systems, MNEs in China and India may choose to adopt centralized structures. However, Japanese multinational enterprises’ constant consensus-oriented behavior and employee engagement resulted in comparatively more decentralized organizational structures. The organizational structure: European MNEs may be more team-oriented, less hierarchical, and creative. However, US MNEs embrace certain essential traits more than others, such as structural flexibility and adaptation and a productivity and performance-focused mindset.
-Marlon
References
Chung, C., & Sparrow, P. (2024). Exploring the configuration of international HRM strategies for global integration and local responsiveness in MNEs. The International Journal of Human Resource Management, 35(11), 1943-1969. https://doi.org/10.1080/09585192.2024.2320768
Krishnan, S. K., & Singh, M. (2011). STRATEGIC HUMAN RESOURCE MANAGEMENT: THREE-STAGE PROCESS AND INFLUENCING ORGANISATIONAL FACTORS. South Asian Journal of Management , 18(1), 60-82. https://www.researchgate.net/publication/5113564_Strategic_Human_Resource_Management_Three-Stage_Process_and_Influencing_Organisational_Factors