Issues Of International Human Resource Management Business Essay


     The field of human resources management (HRM) has undergone several seismic shifts in the last 30 years, and these shifts cause businesses to challenge old concepts of dealing with employees. One of the results of this different thinking is that the whole spate of activities that were once handled by the department usually known as "personnel" are now either handled by a department called "human resources", or even turned over to an outside firm for management. This change reflects the concept that people, the human capital, are quite important, in fact, essential to any organization.

     A further complication in the field is that "personnel" or "human resources" (whatever we call it) has tended, until the last twenty years or so, to be specifically one culture. This is quite possibly because most of the developments in the field came from American companies, so the concepts were essentially American. Today's international business environment, as characterized by Barnatt (1997) has only one consistency -- uncertainty. He cites this as being due to the fact that

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     The desire for ever-increasing flexibility in business operations [leads to] the 'virtual organization' - of an extremely loose web of individuals, capital and technologies which may operate in amalgamation as the ultimate flexible organizational form" (Barnatt,1997 36).

     It can be argued that in no part of the corporate business model is this uncertainty more prevalent than in the field of human resources.

     Scholars in the field of strategic human resource management (HRM) focus on "the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals," (Wright, 1998, 32).

     This focus emphasizes two types of congruence or fit. First, all HRM strategies must fit within the strategic long range goals of the company -- i.e., build better products, capture market share, increase sales, improve services. Second, all HRM strategies must be viewed as fair and compatible to all people affected. In American firms of the 1970s (usually considered to be pre-globalization) the H.R. function was seen as more or less of a record-keeping function.

     The duties typically included hiring and firing of personnel, record keeping for time, salary, work schedules, training, benefits and so on. During this period, most H.R. departments were still referred to as "Personnel" and the heads of these departments had little say in the direction of the company.

     There was a great deal of emphasis on human rights and non-discriminatory regulations created by the American government. The Personnel departments has to make sure that the company's hiring and firing policies were in line with a number of regulations. The department had to make sure that the company did not violate any of the sections of: Title VII of the Civil Rights Act of 1964; The Civil Rights Act of 1991; The Americans with Disabilities Act (ADA); The Rehabilitation Act; The Vietnam Era Veterans' Readjustment Assistance Act of 1974; The Equal Pay Act of 1963; The Age Discrimination in Employment Act (ADEA); and numerous others.

     However, as American companies began to move out into the world, it became clear that certain of these laws did not, or would not, apply to specific cultures. Brewster (1995) in an analysis that compared HR laws in different countries pointed out that American government has "comparatively less legislative control over (or interference from, or support for) the employment relationship than is found in most of Europe (Brewster, 1995, March 1, 7). She quotes one German H.R. manager who observes,

     The major difference between HRM in the US and in Western Europe is the degree to which [HRM] is influenced and determined by state regulations. Companies have a narrower scope of choice in regard to personnel management than in the US" (Brewster, 1995, 4).

     This is in line with Hoffman's observations about managing HR in a multinational company.

     The current strategic perspective stresses that MNCs need to develop competitive advantage by being responsive to different strategic requirements such as product and market diversity and economic efficiency. Thus, today's MNCs pursue a wide variety of strategies. . . These range from global strategies in which the firm uses a standardized approach n all of its national markets to multi-domestic strategies in which the MNC adopts a differentiated approach in each national market . ." (Hoffman, 1994, 74).

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     Cross-Border Issues

      There is an old adage that says "When in Rome, do as the Romans do." That adage might very well be a good one for an H.R. manager to follow in a different country. The wisdom of that is seen in the fact that one of America's primary myths --that of the "melting pot" in which diverse cultures assimilate into a single society -- no longer holds.

      Managing cultural diversity has become a major challenge for HR managers in America, and increasingly around the world. Rather than expect citizens from different ethnic backgrounds to become "Americanized," more and more companies are beginning to develop multi-cultural sensitivity, or rather, are attempting to develop this sensitivity.

     Palich (1999) addressed this issue:

     Faced with stiff global competition, American firms are recognizing the urgency to internationalize their operations, a trend evidenced by a tenfold expansion of foreign ventures during the 1980s alone. The trend accelerated in the 1990s. This expansion is fueled by a number of motivations - e.g., to search for new markets in an effort to exploit unique assets in overseas markets, to gain access to lower cost or higher quality inputs (labor, raw materials, intermediate goods, specialized skills, etc.), to build scale economies and other efficiencies, and to preempt competitors that may seek similar advantages in strategic markets (Palich, 1999, 133).

     Palich goes on to argue, quite convincingly, that the current academic research showing the strong impact of culture on business practices around the world is being ignored by businesses when planning their H.R. strategies. One noted scholar whose ideas have been adopted by several H.R. departments, including Viacom and Coca-Cola, was Hofstede (1980), who theorized that culture had four dimensions: power distance, uncertainty avoidance, individualism-collectivism, and masculinity-femininity. Power distance is the acceptance of the unequal distribution of power in society, while uncertainty avoidance reflects aversion to ambiguity and risk (Hofstede, 1980).

      By Hofstede's definition, individualism

     implies a loosely knit social framework in which people are supposed to take care of themselves and their immediate families only, while collectivism is characterized by a tight social framework in which people distinguish between in-groups and out-groups (Hofstede, 1980).

     Finally, masculine societies value assertiveness and material acquisition, whereas feminine societies emphasize human nurturance and quality of life.

      Though criticized by some, Hofstede's arguments still provide a framework for many HR departments that are faced with understanding the complex dynamics of culture as it impinges upon globalization efforts of a company. Regardless of the background, or home country, of the parent company, multiculturalism, or cultural diversity, is becoming the ruling philosophy (Wright, 1999).

      This philosophy, or attitude if you will, is in part reliant on the notion that cultural identities should not be discarded or ignored, but should be maintained, nurtured and valued as valuable inputs into a company's entire culture.

      As one commentator has noted, multiculturalism is "dedicated to nurturing the self-esteem of the historically excluded and creating an egalitarian culture apart [from the majority] . . . . [It] discard[s] universalism and assimilation to focus on the consequences of culture" (Kauffman, 1993, 12).