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As human resource management has expanded and become more linked with the strategic needs of focused businesses, it has taken on the characterisation of strategic human resource management. This includes approaches to making decisions about the intentions and plans of the organisation through policies, plans and practices. These concern employee relations, employee resourcing, growth, development, performance management and reward. In comparison, SIHRM is used by MNEs that must develop strategies in order to conduct business that takes advantage of global resources and markets for success in the global marketplace. The recognition of four main aspects supports the importance of SIHRM.
First, human resource management at any level is important to strategy implementation. The second focus states that major strategic components of multinational enterprises have a major influence on international management issues, functions, policies and practices. The third aspect states that many of the characteristics of strategic international human resource management can influence the MNEs concerns and goals. The last statement underlines that there are a wide variety of factors that make the relationship between MNEs and SIHRM complex.
The study of SIHRM is thereby challenging as well as important and aids in clearly defining, analysing and comparing different approaches to SIHRM.
In 1986, Laurent concluded that 'the challenge faced by the infant field of international human resource management is to solve a multidimensional puzzle located at the crossroad of national and organizational cultures.' According to that statement, three issues developed: First, the cross-cultural management approach, which examines human behaviour within organizations from an international perspective. The second approach, developed through comparative industrial relations, sees HRM literature describe, analyse and compare HRM systems in different countries. The last approach sharply focuses on aspects of HRM in multinational firms.
In 1986, Morgan presented a model of IHRM that consists of three dimensions. The first dimension is made up of the three broad human resource activities. They include procurement, allocation and utilisation and can easily be added to the following six activities in the general field of HRM: human resource planning, staffing, performance management, training and development, compensation and benefits, and labour relations. The second dimension comprises the three national (or country) categories involved in IHRM activities: the host country where a subsidiary may be located, the home country where the firm is headquartered and 'other' countries that may be the source of labour or finance. The third dimension deals with the three types of employees from the international firm: the host country nationals, the parent country nationals and the third country nationals. Morgan IHRM is defined by the interplay amongst the following three dimensions: human resource activities, employee types and operating countries. According to these three dimensions of IHRM, an increasing number of recent models have developed that specify internal and external factors in order to explain the MNEs choices of IHRM systems. In addition to strategy, the different determinants of IHRM seem to be the industry in which a MNE is operating, the MNEs international life cycle and experience, the organisational structure, the HQ's international orientation, the host country's cultural and legal environment and the resources or strategic role of subsidiaries and certain employee groups.
From these models, three different approaches to SIHRM can be identified: an adaptive, an exportive and an integrative approach.
With a multi domestic strategy, the adaptive approach is defined by subsidiaries which all develop their own HRM system to reflect the local environment. With this approach, differentiation is emphasised and there is almost no transfer of HRM policies or practices from the parent firm to its subsidiaries, or even between the subsidiaries. The major advantage of this approach is that HRM systems can be completely in tune with their local context. However, disadvantages include a lack of coherence within the MNE, a duplication of efforts with no attention to economies of scale and a decreased level of learning from one another. An exportive SIHRM orientation is based on a global strategy in which the parent firm's HRM system is transferred to its different subsidiaries. With high management's belief in generalisability, this approach is often adopted for newly acquired subsidiaries or greenfields and strategically critical groups of employees. Besides the standardisation, internal consistency is also one major intercessional aspect. Inflexibility due to ignoring local differences and thereby missing opportunities to learn is the most important downside. An integrative SIHRM orientation includes the best HRM approaches that have been developed and uses them throughout the organisation to create a worldwide system. With a focus on substantial global integration and an allowance for some local differentiation, this approach combines characteristics of the parent firm's HRM system as well as the characteristics of its international subsidiaries. The sharing of experiences makes learning possible and the spread of good practices exists, but the best practice may still be ill-suited for a particular context. However, due to different employee types, tasks and subsidiaries, IHR managers often find a mixture of these three approaches and present the decision's criteria: local versus global forces, the cultural component of HRM practices and power dynamics.
Through the development of a culturally synergistic approach to IHRM, it was possible to design new combinations of HR practices instead of only transferring the best practices through a compromised solution. This idea of cultural synergy refers to the creative potential of cultural differences, which leads to new solutions and approaches that transcend the existing differences. In 1997, Adler published a problem-solving approach to cultural synergy. It consisted of three fundamental steps: the first described the situation, the second culturally interpreted the situation and the third developed new, culturally creative solutions.
By working with the culturally synergistic approach and analysing multicultural teams at the operational level through workshops, seminars and structured meetings, we get a very close view of the different cultural perspectives. This enables us to design new HR practices by recognising and transcending the individual cultures. This approach therefore goes beyond an integrated approach, as an integrated approach only refers to a global diffusion of the best practices and does not include a new combination. No other approach enables HR managers to actively get involved in developing an organization that values cultural differences and guide their organization towards a more inclusive worldview.