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The speedy internationalization of world markets has encouraged companies of all origins and sizes to expand internationally. To make this international expansion a success, companies need to look into their human resource structure and role. This paper, based on the theories of international Human Resource Management, identifies the challenges that Sleek suppliers which is currently a domestic auto supplier company will face while internationalizing its operations and discusses ways in which the human resource manager can address these challenges. It shows how managing these challenges on reward and selection of employees can allow the company to profit from its international operation and achieve better and rapid development. This paper also explores the way in which human resource practices come into being and how they are implemented and coordinated.
Human Resource Management is used to describe the formal system in an organization devised for the management of the people within the organization. The responsibility of the human resource department in an organization is mainly divided into three areas. These are: staffing, employee reward and compensation and defining work. The main purpose of human resource management is to maximize the productivity of a company or organization which can be attained by the optimization of the employees' effectiveness. Despite the ever increasing pace of change of the business world, the mandate of human resource management is unlikely to change in any fundamental way. As observed in the Journal of Business Strategy by Edward L Gubman, "the core mission of human resources will always remain to obtain, develop and maintain talent: align the workforce with the business and be an excellent contributor to the industry. These three challenges will never change."
As earlier mentioned, this paper looks into the internationalization of Sleek Supplier's operations into the European market. Sleek suppliers are a private sector company dealing with the supply of interiors to automobile companies. Its main objective is to expand into the Swedish and French market. This is a result of its selection by several automobile companies within these countries to supply them with interior parts for their operations.
Sleek Suppliers was founded in Seattle's Pike Place Market in the year 2000 under its manager and founder Michael Graham, with the aim of providing quality interior automobile parts to the local residents of this town while still maintaining quality services. In 2002, the company took a change in direction when Graham, after visiting the People's Republic of China, decided to adapt some new principles in order to expand and hence increase the size and revenue for the company. By 2004, Sleek Suppliers had increased its number of outlets to 15 and had furthered its location span by entering Chicago and Vancouver. With over 500 employees, the company prides itself with its achievements and is now looking forward to exploring the European Market, specifically France and Sweden.
Overall international strategy
In order to establish an effective internationalization strategy for the company, the senior management needs to ask themselves several questions which will act as a guideline in the internationalization of the company's operations. According to Bartlett and Ghoshal, an international strategy involves exploiting the parent company capabilities and knowledge through worldwide diffusion and adaptation. Some of these questions are: what type of strategy are we going to use, global, multinational or international? What type of management approach are we going to take? What steps are we going to take in order to increase local responsiveness? Is the approach going to be the same or will it be different for both locations? What typical strategic responses are we going to undertake in order to increase the firm's competitive advantage? Are we going to use explorative, adaptive or an integrative strategy in the two locations?
This paper covers the different human resource management policies and practices the company will face while trying to enter these foreign markets while mainly focusing in the area of reward and selection. The objectives of this paper therefore will be to look into the multinational strategic response which will involve building a strong local presence through sensitivity and responsiveness to national differences. Other objectives will be to come up with an effective management approach in order to increase the local responsiveness and the strategic responses to undertake in order to increase the firm's competitive advantage and to understand the human resource policies and practices in both of these countries.
There are several theories and frameworks I will draw on in this paper. Some of these are the earlier mentioned Bartlett and Ghoshals framework and that of De Cieri and Dowling.The major difficulty that I will face when writing this paper is the abundance of information that this course offers within the text.
Companies, large and small have expanded their operations by entering foreign markets. As globalization continues to speed up, organizations need to invest heavily in their human resource structure. The human factor is increasingly being recognized as critical to the success of any organization. As Bohlander and Snell commented, "In the past, observers were afraid that machines may one day eliminate the need for people at work but in reality, jus the opposite has been happening. People are more essential than ever before."
In most rapid rising economies, it may be easier to access capital and technology than it is to access good people. Competitive advantage therefore belongs to those organizations that know how to attract, select, develop and maintain the required human talent.The human factor is considered very vital especially when international activities are involved. Although the core activities of the human resource management i.e. planning, staffing, training , performance management and rewarding do not vary much between domestic and international environments, human resource management involves a varied set of activities with a more assorted population and in a more intricate external environment. There are several factors which differentiate domestic and international human resource management some of which include broader external influences, greater risk exposure and more involvement in employees' lives. Other factors are the need for a broader perspective and variation changes in emphasis as the workforce mix of parent-country nationals and the host -country nationals.
It is however important to note that a certain amount of similarities between domestic and global human resource management activities are potentially transferable across the nations in context though the extent of transferability is defined by the host country. Failure for companies to recognize differences in managing its human resource structure in foreign environments often leads to difficulties in the company or organization's international operations. As Desantnick and Bennett concluded, the major causes of failure in international venture arise from a lack of understanding of the crucial differences in organization human resources at all levels in foreign environments. There are certain techniques and philosophies that have proved successful in the domestic environment but their application in a foreign environment often leads to frustration and failure. These considerations are as vital as the financial and marketing criteria upon which many decisions to undertake international ventures depend. Hence, when a company decides to internationalize its operations, it should consider the human factor as a very important variable in the decision making process.
A broader view of international human resource management is necessary in order to better explain the difficulty and challenges faced in the management of international human resource issues. A common example of a hypothetical framework that has been derived from a strategic approach using a multiple practical approach is that of De Cieri and Dowling. Their framework assumes that international firms operate in the context of worldwide conditions, including the external contexts of a nation and inter-organizational networks. It further explains that international firms compete in an increasingly compound environment where the challenges of doing business can be highly variable. International companies and organizations rely on having the right people to manage and run their businesses and good international human resource management practices that are appropriate to the situation in which they take place. Combining the appropriate workforce and human resource practices is a vital success factor in international business ventures. According to Akoorie and Scott-Kennel, 2005 companies may desire to be 'globally connected' to the digital market by using the web to become more proactive in market competition and strategies.
Human resource policies are a set of rules and guidelines that are laid down by a company or an organization in order to ensure a healthy working environment for its employees. A human resource policy that is straight to the point ensures a healthy working environment as well as creating a sense of security to the employees. Developing human resource policies involves a lot of thought process as a poorly designed policy may affect the good will of a company in a negative way. These policies should not be too complacent as this will cause divergence of the organization from its main objective. However an organization's human resource policy should be crafted on the basis of the overall human resource policies of the country in which the organization is situated.
Most countries have their own human resource policy and companies that make their base in a country should craft its human resource policy accordingly.
In France, human resource policies are made to serve the wants of the employees as well as those of the employers in the best way possible. When it comes to the current state of Human Resource management in France, it should be accepted that France's policies are not the same as those of other countries because of its exceptionality on a number of fronts and the current government in power. These differences in human resource practices are not likely to arise in terms of which tasks to be dealt with but rather how they are dealt with.
With the steadily changing employment legislation and global pressure and intense domestic competition, French organizations have initiated fundamental changes during the last decade. Emphasis has been observed to shift from economizing to adding value as market stakeholders are demanding quality and cost effective products whereas competitors on the other hand are demanding even playing fields across cultures.There are many arguments raised for and against the success of international companies managing their Human Resource issues in a multinational organization culture. Around ten years ago, it was already said that "A small number of business organizations today could claim to be unaffected by globalizations and pressures for competitiveness, and the tendency has unquestionably caused the management of Human resource to take on new strategic significance" (Lundy, 1994 p.5)
An in-depth analysis of France's human resource policies reveals the fact that it is an incorporation of several other policies which include the adoption leave policy, working time policy, vacation policy, sick leave policy and employee relations policy. Adoption leave policy deals with leave for employees, both single and married couples who adopt children up to 18 years of age. Human resource policy should also comprise of leave policy which deals with the provision of leaves for the employees. Employees should not only be able to know about the leaves that they can apply for but also the procedure involved applying for and getting the leave. Unlike the rest of Europe, France boasts of a distinct feature in its working policy where an employee is allocated a 35 hour working week. This particular policy is deliberately planned by the government in order to increase employment in the country. While framing its human resource policy, a company needs to take into account that French citizens are entitled to five weeks of vacation annually. Sick leaves in France are also very employee-friendly. During sick leaves the employee receives various social security benefits and is also supplemented by complementary sum paid by the employer. Health and safety policies are aimed at protecting employees from various occupational risks. This policy includes raising awareness, guidance and assistance to minimize the risk from any sort of accident or disease.
Employee relations policy should greatly be emphasized during the framing of human resource policies in order to ensure a healthy employee relation. However the success of this policy not only depends on the framing but also how well it is implemented. The human resource policy in France is as a result of the strong impact of legal and political characteristics of the French. The various features of human resource policies in this country like recruitment, training, management and compensation are a vital part of its human resource policy. Most French companies make it a point to translate their human resource policies into the various work programs. These policies are designed to build the structure and culture of the organization and to ensure the commitment and motivation of the employees in order fro them to deliver the best quality of work. The future of human resource policies in France seems to be bright as more companies realize its growing significance. There are other emerging policies such as career agreement of employees which helps to provide them with a comprehensive career plan.
Sweden is among European countries that adapted an international study of call centers with the focus on human resource practices and performance known as the Global Call Centre Industry project (GCC). Call centers can be defined as organizations whose main purpose is to work with clients over long distances, supported by information technology. Although the telephone is the primary communication channel, the trend is slowly moving towards other channels such as the internet and email.
In Sweden, call centers have been regarded as an industry consisting of specialized companies some of which undertake outsourced customer-related services on behalf of others, known as external call centers. However, most call centers in this country are internal operations referring to a department that is part of the larger organization with a different primary activity. Over the last several years, working life in Sweden has changed drastically, creating a whole new range for human resource managers. For many years, this country has been famous for the harmony in its labor market and the lack of demarcation disputes between unions which afflict other countries. Though much of this harmony has disappeared in recent years, this country's reputation has an extended history. Battles between employee and employer were rampant in the 1920's which culminated in the agreement between the unions and employers in 1937. When it comes to training and professional development, Swedish human resource policy dictates that the basic training provided during the first year of employment, should vary between 1 and 156 days including introduction and practical experience. Also new employees within an organization or company should be provided with basic training lasting from one to twenty days. The amount of post basic training provided for employees within an organization should vary between 0 and 50 days per year on average. This policy dictates that the time required for an employee to become fully qualified should be between zero and seventeen weeks though qualifying times for each employee may vary.
From the above, it is evident that Human Resource management plays a major role in the success of the involved companies. Organizations and companies, both local and international should therefore invest in this function in order to create a healthy working environment for the employees hence maximize their revenue. When internationalizing its operations, a company may face challenges but these challenges can be overcome by creation and implementation proper human resource policies.