The organizations may have different reasons and motives when they expand globally but most of them focus on increasing their profits with a larger turnover. The organization has to balance its business strategies with the management of human resources. This globalization results in more foreign direct investments, helps them to earn foreign currency, have access to more advance technological and management practices which may give a new direction to their business and operations. The corporations sometimes need to change or transform their current practices and styles while entering a complete new and different country/ region. Hence the role of Human Resource department becomes vital while dealing with such conditions. They may be following a particular strategy in their host country but the new country may force them to act differently so as to survive in the market. This require HR department to build a strong framework to recruit local/ international employees, hiring, managing a new workforce together having different culture and preferences with the existing employees. It also needs to understand the legal issues and complexities of different governing style. Therefore HR department needs to come up with a cohesive strategy to maintain good image in the foreign market without affecting its operations in other regions. The corporation may follow the familiar practices or the new practices, whichever appears to be more profitable.
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The main strategies that are adopted by the corporations may be broadly classified into following categories:
Ethnocentric: This HR strategy favors the firm control of the parent organization on its different subsidiary units and franchisee. This strategy involves an upper hand of the traditional practices of the organization rather than switching to new local strategies. Here the new subsidiaries resemble their parent company. The company rather than employing local people prefers the management of key positions by the expatriates (i.e. the natives of other countries). This is generally followed in the organizations which require technical skills that are difficult to find in the local people or require time for the training the local people. The foreign employment issues generally restrict the smooth functioning of the corporation in the host country. The company follows its traditional working and management style. This is generally practiced when an established corporation tries new ventures in a less competitive market. Here the cost of operation is generally high as all the key employees do not belong to the host nation. This is basically the headquarters controlled methodology which is also known as global strategy.
Polycentric: In this HR strategy the main workforce is of the host nation where the corporation has just established. All the positions and work is managed and controlled by local employees rather than corporationâ€™s typical management style. This results in cost reduction in the salaries and the travelling and housing expenses. Here the cultural barrier problem and that of local language is greatly reduced. This strategy lacks the migration among employees of the parent and the host country. This is based on local responsiveness of the host country. In other words it is the multi domestic strategy. This also provides better employment opportunities to the local people. But sometime this complete change in the management may adversely affect the operations of the corporation.
Regiocentric: This is similar to polycentric in which the host country nationals are employed. Here the management structure is based on the regional integrity and culture. This allows easy migration of employees within the region but not to the parent country. For instance a European country operating in Asia may allow easy transfer or movement among the Asian pacific employees but not with those of the European Union. Here an advanced network system is required to control the different regions.
Geocentric: This is a bridge between the headquarters controlled and region responsiveness based strategy. This is a complex strategy where the positions and posts are filled depending on the ability of an individual rather than based on host/parent country nationality. This requires a strong and efficient communication channel between the offices in different regions also within the office because the employees of different countries need to work together without discriminating on the racial or cultural grounds. The employees get to have a better understanding of different working cultures and provide an opportunity to learn from each other. This also allows movement of employees to different countries, thus helping them to have a better understanding of the corporation. This strategy helps the organization to make the best use of its past experience and strategies in conjunction with the best opportunities of the new host nations. Generally geocentric strategy is considered to be the ideal as balances both theoretical (traditional) and practical (local) aspects. This is also called translational strategy.
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The above explained strategies can also be classified into
Impact of globalization on firmâ€™s success
Overlooking few exceptions, globalization when applied with proper strategies mostly has a positive impact on the profits and success of a corporation. It helps an organization to adopt advanced technology and management practices of the host country. It motivates the employees to be more competitive and efficient. As a result of globalization a corporation can try new experiments in its products and services. These experiments if successful allow the firm to shift to these better methods. All these factors help the organization to earn global recognition and make handsome profits. The challenges being faced in different regions also provide the competitive edge to the organization.
Q2.The role of Enterprise Resource Planning (e.g. SAP) in Human Resource Management and the analysis of a knowledge management plan that impacts on a firm's performance.
Ans2. The neck breaking competition in the market demands the organization to be as efficient as possible which directly or indirectly questions efficiency of the Human Resource Management of any organization. Thus a proper management of human resources becomes very important for the organization. This requires the correct evaluation and analysis of all the information related to the human resources of the organization. With the growth of any organization the information and data related to the employees and workers also increases so the management of this becomes difficult.
ERP (known as Enterprise Resource Planning) is a system that integrates the use of computer in handling these data in an efficient way. This allows HR department to focus on the management of the resources rather than wasting time on the collection of them.
Thus ERP is a tool that uses different modules to record the behavior and details of the employees and links it with the objectives of the company, thus providing better analysis platform.
The modules relating ERP and Human Resource are better known as HR modules which narrow the gap between the use of Information Technology and the management of Human Resources. ERP allows easy flow of information between the different levels of management within and outside the organization. ERP can make use of a centralized database or may be divided into a number of small modules that allows the integration of different department on single computer system. The information collected through these separated modules may be combined to give a broader and clear image to the various departments of the organization. The ERP had different modules for controlling different activities like manufacturing, finance, supply chain, human resources, customer relationship etc.
The human resource module manages training, payroll, time, benefits, attendance etc of the Human resources of the organization. ERP provides a computer based automated system to control all these activities feeding and drawing data into various modules and then operating on a common platform. This allows access to reliable and consistent data together will complete transparency in its functioning.
Implementation of ERP in Human Resource Management and its Role
ERP consists of a number of typical modules known as the functional units. The implementation of ERP requires trained professionals giving technical skills required to understand and implement ERP. Therefore generally some experts providing these services (like SAP) are required for implementing an ERP system in an organization. The size of the corporation, extent of automaton and the structure of the organization play a significant role in deciding the strategy for implementing ERP as different modules at different levels. ERP helps executives, managers, employees to use the skills of their workforce in an efficient manner by better planning, forecasting and appropriate decision making. Automation can be done for different roles like:
Recruitment and Selection
Different modules can be developed for handling these activities at separately. Also the combination of or more of these can be used together for better management. Before actually implementing ERP in any business certain guidelines should be setup before hand like what data is to migrated, which is to be digitalized. Also different vendors have different working strategy in implementing ERP, therefore the main motives and objectives of the industry should be taken proper consideration before implementing ERP.
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Now the role of ERP as different modules in the management of:
Recruitment and Selection: This is one of the most important functions of the HR department of any organization at it forms the base for progress of the organization. Thus deploying ERP in this process will help greatly as it will make the task of selecting candidates easy based on certain pre-decided factors. Also a separate ERP module may be developed for facilitating tasks like preparation of different question sets for candidates and then a transparent and fast judging process.
Employee Administration: This module deals with the management of the information of the employees of the corporation. This includes storing all the basic details like name, designation, experience, salary, address etc. This includes the storing of all the basic information in a separate module that can be used at different levels of administration if required. This really facilitates the handling of data, now instead of maintaining separate printed or handwritten documents; a single module on a computer will manage all informtaion.
Payroll: Management of different payroll for different employees also becomes a cumbersome task with the increase in the strength of employees in the organization. Therefore implementing ERP module in such an activity greatly reduces the hectic work.
Central Database: All these separate modules can either be stored separately or instead they can be maintained as a single database, with different employees having access to particular modules only depending on their posts. This saves the redundancy as now data is being stored on a single database. This allows easy access to the information which reduces the time required to solve different problems and queries of the organization.
Legal Reporting: Management of all the legal issues related to an organization is also very important. ERP modules play a significant role in the management of all the contracts, obligations, bonds etc. This makes the task of the HR department in dealing with employees and their obligations trouble-free.
Impact of Knowledge Management on Firms Performance: The definition of Knowledge Management varies from one organization to another. Some organizations believe in the best use of knowledge management for maximum productivity and profit while other focuses on the use of knowledge of management for strategic advancements. Therefore a sound and efficient use really helps in the success of an organization. The impact of knowledge management can be seen directly in the better risk management of the funds and assets, also minimizing the risk of people leaving the organizing, handling of emergency situations, strategic acquisition and merger etc. Thus knowledge management has a very significant impact on a firmâ€™s success.
Q3. How firms can utilize knowledge management strategies to outperform competition (for example, how does Wal-Mart outperform other global retailers through its logistics management?) and selecting appropriate HR practices for ensuring workforce performance.
Ans3. Knowledge management is also one of the most debated topics that play a major role in deciding the success of an organization. It is a strategy that exploits the intangible resources of an organization in the best possible manner. Knowledge Management is the proper knowledge of the information and communication requirements of an employee. Knowledge Management allows the qualitative study of organizational management system which for instance helps in early and efficient completion of the different projects and meeting the deadlines. This knowledge can be applied at the following different levels to achieve success of the organization as a whole.
ARTIFACT LEVEL: This includes the management of documents, managing data which further provides information about other data, managing various semantics and algorithms etc.
INDIVIDUAL LEVEL: At individual level this knowledge system is used to maintain profiles of each individual employee and also of the managing committee. This also includes a proper management of the tacit knowledge.
TEAM LEVEL: At team level it manages the workflows of the complete structure of the organization, finding all the possibilities of collaborative working environment, and the management of the team.
ORGANIZATIONAL LEVEL: It includes managing of knowledge related to the development of best suitable strategies, managing competency among the employees and motivating them time to time. This also covers developing of the management style of the organization.
INTER ORGANIZATIONAL LEVEL: At this level it is used to manage network with other organizations, management of projects and future plans of the organization.
Thus the application of all these strategies at different levels will transform the complete working structure of the organization in a better way, thus helping to achieve the goals easily and well structured manner. Thus a proper Knowledge Management System helps an organization to identify their areas of weakness and then working on those missing areas. It also improves the intellectual capital of a corporation and encourages the free flow of ideas in the organization which ultimately leads to greater productivity.
Logistics Management at Walmart: The main factor that allows Walmart to outperform its competitors its ability to reduce cost of their complete supply chain by handling it in an efficient manner. The benefits in the supply chain management also increase its other financial profits, thus allowing it to expand more and more. The key factor that distinguishes Walmart from other is the efficient use of the knowledge management in deciding its strategies. For example the density and site-to- store logistic strategies have benefited it largely. In the density strategy the Walmart stores are located relatively close to each other, which allow a single truck to make several shipments in a single round. Thus the dense network of stores reduces the supply chain management cost significantly. The site-to-store strategy is mainly aimed at price sensitive sophisticated consumers. This allows consumers to see the product on the website, together with its specification and pricing structure. After the consumer chooses the product, it is being delivered to the desired location and that too at a very nominal price. This attracts a large number of new customers. Thus Walmart through its strong Knowledge Management system decides which strategy to adopt in which region and then applying it in a very efficient management system in conjunction with technical support if needed.
The appropriate HR practices include cover a very large domain. Write from recruiting and selecting the most suitable candidate to the proper management of the workforce are the most important activities of the HR department which lay the basis of development for any organization. The performance of the employees largely depends on the working environment inside the organization. Thus it becomes important for the HR department to maintain a harmony among the workers of the organization, also motivating them from time to time. The efficient management of the available workforce may lead an organization to reach new heights by improving the productivity significantly.