Introduction To Globalization In Human Resources Business Essay

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Globalization is not recent most occurrence, the experts argue that it came to existence dating back many years i.e. 100 years ago. But the term Globalization started to evolve from 1980's. The technological breakthrough has made several advancements in the field of trade and financial sectors across the globe. Most driving factor of the globalization was the integration of trade and technology which broke many barriers across the globe.

Drivers of Globalization

1. Market Drivers - Balancing of Per capita income, Balancing of Life styles, and Organizational behaviour in terms of global consumers.

2. Cost Drivers - Achieving Economies of scale, Advancement in the mobility, emergence of industries with productive capability and cheap labour cost.

3. Competitive drivers - Growth of many new companies and the networking globally eases the trade, new formation of the company brings in competition globally and new strategic alliance is sought to achieve the company goals and objectives.

4. Governmental Drivers - Reduction in the tax and tariffs helps to reduce the trade barrier between any countries, Privatization of the firm helps to run the system efficiently and more productively and creation of various trading blocs like NAFTA, EU, AFTA and ASEAN helps to strengthen the trade across the globe.

Definition Of Human Resource Management

According to (John Leopold, Lynette Harris, 2009) Human resources , in the modern industrial capitalist context, become qualities which are traded and bargained over in a very calculative manner and given that organization - especially business organization in the market context of the industrial capitalist economy compete with each other in order to survive, human resource become matters of considerable competitive significance. According to Kay (1993) locates them among organisation distinctive capabilities (the starting point, he argues, for the strategic analysis of any organisation) and Hamel and Prahalad (1994) identify the skills and knowledge of an organisation staff as the core competencies that potentially give it advantages over other organisation.

Current HR challenges and issues

Today's competitive world, the technological breakthrough, innovations happening every day but still there is an element of uncertainty involved. Recession or credit crunch is normal financial crisis happening as the market tends to grow globally. The experts argue that it may be because of the financial volatility across the developed economies like US, Uk, Australia and Canada.

Looking the other way around the emerging markets like India, China, Brazil, South Africa and Turkey remain unaffected of the financial turbulent. The recession or economic downturn is mainly due to the cyclical factors like liquidity of the currency involved in the trade, low degree of leverage and risk appetite. During this downturn HR plays a vital role in managing the various issues of the organization. This study helps us to understand the challenges of the HR, their role during recession, impact of recession, solutions and strategies HR implements to overcome the downturn and implications in its existence.

There are many approaches the HR manger may employ to overcome the various uncertainties and use the human resources wisely to get the maximum productivity for the organisation.

The types of approaches adopted by HR to overcome the challenges are:

1. Numerical flexibility - temporary contracts, agency work, labour pool, outsourcing, part-time (insecure), subcontract and freelance.

2. Temporal flexibility - shift work, rostering, annualised work, part-time (secure), sabbatical leave, variable working pattern and compressed work week.

3. Ad hoc flexibility - paid overtime, unpaid overtime, layoffs, redundancy and casual work.

4. Functional flexibility (qualitative) - horizontal or vertical multi-skilling and team-work.

From organisations point of view there are two main reasons existing to be in flexible means. Firstly efficiency i.e. for any organisations to gain the maximum result with the existing production capability with the minimum operating cost. Secondly the quality of their product, innovation and service.

From the employee point of view his personal targets, challenges, working style, responsibility and satisfaction internally and externally his salary, rewards, perks, and career prospect.

Numerical Flexibility

Employers enjoys the upper hand in this type, if there is no requirement of the services they could redundant the staff according to their will and consent as there is no additional cost inquired to them. Based on the resource required they can use the availability to increase the optimum level of human resource wisely. From the employee point of view the contract he is with which allows him to work permanently for the organisations, the benefits available to him.

Also in the case of employee is made to redundant it may open up with the new career and also provides him the chance to retire earlier from the service. However, many companies try to introduce various kinds of HRM policy and portfolios in the system to tackle the temporary problems. But however the UK fixed term regulations of 2002 stemmed from the EU directive put an end to the employer using the short term contract as the tool in renewing the contract again because it abuses the system and also it also discriminates the other employee of the organisation according to (John Leopold, Lynette Harris, 2009). The major barriers involved in this type of contract is that the redundant is made in more number the firm has to consult the trade unions, local community and other agencies involved in the recruitment which has to sort out in a legal way.

Temporal flexibility

This type of contract is made available to the employee to suit his working needs, as the people needed more time to spend for their personal needs like work and family. For instance according to (John Leopold, Lynette Harris, 2009) quarter of the total work force is part-time workers who are mainly students and 45% are women's.

The other major example is that the major automobile firm Volkswagen in the year 1993 became the first global corporation to introduce 30 hours working per week in order to save 31,000 jobs. The other example is the German firm Opel in 2003 November took the initiative like Volkswagen in saving 21,000 employees jobs.

The both the company initiatives in the HRM policy makes evident that they didn't want to lay-off but to run the system efficiently, productively and also loyal to their employees.

The major barriers in the part time contract is that this type of workers are less reliable, less committed and other hand they don't seem to be getting the benefits like the full time staff gets. There is also a psychological feeling that they are of less status to the employer.

The other encouraging factor is that part time workers are available in abundance to suit the business working hours. Tam(1997) argues that part-time work may become trap to which might affect the employee be able to convert into full time worker. It is fairy a simple system opted by the HR mangers, this is very welcoming for the students to earn an extra income when they educate and they have little legal constraint.

Functional Flexibility

This type of employment is offered to a person who is highly skilled, who has the ability to various work and technically sound. His job is well defined and the qualification level is high.

The common barriers in this type are some of the employee didn't want to work in other departments, but has the specific interest towards the one particular field. The amount spent on the training and technology. The advantage is that the team working skill develops. The more and more of ad hoc training make the employee more illusory in his work. The employee is educated with the latest trends, happenings and up to date knowledge about his job.


The HR plays the key role in shaping the future of the firm which has the control over the human resources employed at and work towards their welfare by encouraging them to achieve the organisational goals and objectives. It is the department which is mainly concerned about the performance evaluation, appraisal, and recruitment of the staff, addressing their concern, rewards and other benefits available to the staff.

HR operation is often considered as the key business area which is unconnected with the strategic HRM challenges like performance management, labour productivity, structural changes and leadership development of an organisation.

HRM Innovations in Recession

The recession gives the opportunity to create a Human Resources Management. HRM key attribute is to invent new ideas, to constantly update HRM Processes and to develop or change the policies. The new system has to be cost efficient one for the organisation. The HRM innovative ideas are easy to implement during the business growth, but during the recession it is really hard to cultivate the change.

On the other hand, the Executive level Management suggests the input to key make the HRM Processes better. The top management is in the verge of making more revenue, hence emphasize on the potential cost savings and they make every single penny valued and stress well to their the line management. The HRM Contributes significantly in cutting the cost to the organization and the HRM Function has to be innovative in their proactive in all the level of aspects.

The HRM Function has to focus innovatively during the recession as the role of Human Resources during the recession is vital in cutting down the cost of the organization.

The top management expects their line managers to support in all the aspects of business to devise innovative solutions to the issues they face during recessions, which will potentially contribute to the growth of the organization stronger, when there is a slowdown in the market.

The HRM Innovation during the recession has to focus on the following areas:

1. Employee reduction.

2. Strategic initiatives like increase in the productivity with lesser work force, stock and cutting down in the operating cost.

3. Restructuring of the Compensation scheme.

4. Ensuring benefit schemes are altered accordingly.

HRM Function has to find innovative solutions for the following areas:

1. Evaluate and Identify the real, potential and loyal employees and to keep them in the organization

2. Holding on to the top potential, capable employee to strengthen their development program

3. The full time employee can be downsized into part time level to retain him for the future.

Strategic role of HR during Recession:

1. The organization's policies and handbooks are up to date. There should be an annual review of the employee handbook for compliance by an experienced HR professional is very much suggested. To work efficiently for the growth.

2. Layoffs are really hard. HR must be aware of the legal responsibility to minimize the organisational risk, try to have the loyal worker for the future.

3. The overhead costs can be reduced by giving flexible shifts.

4. Cost cutting to the potential employee may result in the potential employee being under mind, or may even resign the job out of frustration. HR must know to deal with it in an efficient way.

5. By offering timely rewards and benefits will certainly enable the employee to perform constantly more productive. Also the professional courses and training in addition will be additional gain for an employee.

6. During the cost cutting or downsizing the organisation one must know handle the excessive job left over and the description about the job profile should be well established.

7. The HR manger should always constantly need to review and update the rules, regulations and policies as and when it is required.

The recession and its effects

The Global Economic Crisis has very seriously alarmed the developed economy in many dimensions as it has impacted severely. The following are the global impact of the current crisis may be outlined as under: 

* Developed and strong economies like USA, UK turning cautious and protectionist leading to tight the working visa and outsourcing project norms. 

* Very Massive job cuts across USA, UK, Japan by major MNC companies. 

* The exports being impacted very badly and overdue capital outflow. 

* The lower industrial growth, lower corporate profit resulting in the GDP rate. 

* The credit facility offered by the bank is over cautious. 

* Stressful situations for employees in terms of their over work load and cut down in their benefits and no appraisal or salary hike. Even well managed companies like Toyota and Microsoft also have been significantly affected by the economic downturn, majority of the consumers have lost confidence and the consumer behaviour has changed. According to Prof.Nouriel Roubini, "This is the worst financial crisis we had since the Great Depression" The crisis is not v-shaped rather it is U-shaped recession is longer than V-shaped recession. The previous recession 1973-75 was considered has the U-shaped recession where the low growth and decline in the economy was lasted for about 2 years.

But gradually economy started to grow after 1975. The expert believes that economy should come back to its normal by the end of 2010.

1. Business Organizations Perspectives

*Cost cutting, Labour redundant and maximise the growth opportunity.

* The Firms objective is not making profit but to consolidate and remain to hold the market share.

* The practical steps were made to focus on the core objectives, develop temporary plans, and try to slow down the long term projects and concentrating on short term goals to tackle the downturn strategically.

* The long term planning is cut short or altered.

* Corporate strategy like cash flow is checked.

* The corporate team plans for the future with the clear focus, priority and innovation.

* This is considered as the opportunity for the firm to grow its strength.

* The corporate plans are implemented and it is simple, practical and it is integrated. 

2. The Employee Perspective

The current global recession has created a stressful situation for employees and must be dealed effectively by HR managers to help the organization to achieve its goals and objectives. Employee's faces numbers of issues owing to crisis are

*Loss of Laid-offs: Employees are struggling due to the loss of laid off colleagues. As they were also part of their workplace and social network.

*Stress: Not only losing the jobs, but mentally stressed about their career.

*Demotivation: During the times of downturn, Frustration can easily demotivate and distract the person.

*Financial Problems can be more vulnerable as many of them are married and especially the one with kids.

*Conflict and Intolerance arises because of the impatient & insensitivity.

*Mergers and acquisitions: During a recession, the mergers and acquisitions are inevitable for the firm to survive. The consequence can cause mental dilemma in the firm's employees.

3. Human Resource Perspective

During the downturn or turbulence corporate always want change its strategies from long run to short run, what is essential and feasible is being looked in. There is always focus in the core development process during the economic slowdown.

The focus is always on the developing side; new strategies are developed in order to attain company's goals and objectives. There is always practical formula developed in the HRM to ensure the recruitment, training and industrial learning is provided to the skilled employee to have or safeguard him for the future.

Employee Recruitment: In times of crisis, the purpose of recruitment is not quantitative but qualitative and innovative matching to that of the growth, expansion of the company's mission and vision. 

Although every employee roles is predefined with set responsibilities in larger business companies, but during the crisis human resources have always assigned with developing, initiating and assessing the aptness of the organizational structure which can bring effective changes to eradicate corporate silos, enhance the skill set, communications and fastens up the development and release of new products and services of high quality to the consumers. Once the focus, priorities and plans of the organization is set, next step is to educate and train the employees in achieving the goals and objectives.The companies which builds up the institutional learning systems sustains successfully during economic downturn. For learning systems to be effective, internal barriers like communication must be eliminated and new non-traditional alliances should implemented either way. This would encourage the employee to share his ideas to the organization