The view of Current Business Environments

Published:

In the today's dynamic business world, globalization and outsourcing are the buzz words for all Organization across the globe. Thanks to the advance technology and Organizations like World Trade Organization (WTO) and Global Agreement and Trade and Tariff (GATT) for making the world trade so easy before ever. Business is expanding across the states, countries and continents as well. MNEs, business culture spreaded very rapidly, this intends the Global HR Mangers and business community to go for International HRM. (Brewster et al, 2008) claims that "A key task for organizations which operate across international boundaries is to manage the different stresses of the drive for integration (being coherent across the world) and differentiation (being adaptive to local environments)". (Brewster et al, 2008) claims that "International HRM (and its more recent 'strategic' derivative, SIHRM) examines the way the organizations manage their human resources across these different national contexts."

Lady using a tablet
Lady using a tablet

Professional

Essay Writers

Lady Using Tablet

Get your grade
or your money back

using our Essay Writing Service!

Essay Writing Service

Chen and Wilson (2004) contend that the" optimisation and standardisation of HRM internationalisation balanced with localisation of policy implementation constitutes the ultimate HRM policy". Dowling et al (2009) identify four factors that 'moderate' the differences between national and international HRM:

The cultural environment (culture difference)

The industry or sector which the multinational is primarily involved (International or domestic)

The scale of dependence of the multinational on its domestic market (Huge demand in the domestic market means less need to expand into foreign countries)

senior management attitude (senior managers experience in the global arena)

MNEs account for 63% of all international trade (Brewster et al, 2008,), with international trade itself trending towards an ever greater share of global economic activity. Now-a-days most of the MNEs are opting for outsourcing, to maximize their profit using the factors like low wages, competitive advantage in the developing and third world countries. Global HR managers has to understand the importance of various responsibilities of IHRM polices and strategies in the success of the business in the international arena. So MNEs and global firms are implementing the IHRMS to make use of its unique advantages when compare with their existing domestic policies. Rugman and Verbeke (2004) stated that "despite the benefits of internationalising business firms, multinational companies retain the concentration of workforce and assets in their home countries or region."

International cross border alliances, Merger and Acquisition (M&A) and Joint ventures are the current trend in the dynamic business environment to survey in the competitive world. The IHRM is playing vital role in all the form of the business especially in M&A, joint venture, cross border alliance origination culture, nature culture is crucial factors for business success. Brewster et al (2008) note that "We can experience many of the manifestations of different cultures through the films, soaps and documentaries that abound on our screens. Travelling to another country heightens this sense of difference; food, customs, language, transport, housing, entertainment - all these everyday things may have to be reconsidered and seen through other eyes".

Haire et al (1966) surveyed 3,500 managers in 14 different countries and estimated that 28% of discernible differences in management attitudes were culturally based. They identified 4 main cultural groups: Nordic-European, Latin-European, Anglo-American and developing nations. This started a trend to try and divide the world's complex pattern of cultures into neat, analytical groupings - with all the attendant risks of historical inaccuracy and gross sensitivity.

Better understanding the culture will help to do the IHRM frame work effectively. Hofstede argues that an individual's culture may have several levels: (1) national; (2) regional, ethnic, religious, linguistic; (3) gender; (4) generation; (5) social class; (6) organizational. For Global HR Managers, understanding the different country cultures is quite challenging, furthermore they have to modify the policies with home country or head quarter policies.

Torrington (1994) concluded that international HRM is not simply human resource management on a grander scale. He considered that several familiar aspects of HRM, such as recruitment, selection and employee relations are actually outside the scope of international HRM because of the different (primarily national) legislative frameworks to which they must adhere.

Commitment is one of the original 4-Cs featured in the influential Harvard model of HRM (Beer et al., 1984). It is regarded as an immediate and, perhaps, the most critical outcome of human resource strategy since employee commitment is seen as the key factor in achieving competitive performance. Hendry (1995) commitment implies "an enhancement of the individual and his or her skills, and not simply what this can deliver to the organization''.

Lady using a tablet
Lady using a tablet

Comprehensive

Writing Services

Lady Using Tablet

Plagiarism-free
Always on Time

Marked to Standard

Order Now

International employment regulation, immigration rules, labor related issues are important factors for any firms operating in the global environment. Immigration and visa rules are changing very frequently. After the global financial crisis, a lot of changes were made in the immigration rules in the countries like USA and UK. Knowledge transfer, training are the key factors of outsourcing industry but MNEs are finding difficulties in implementing the immigration process .Thousands of people are moving from one to another country . (Taylor et al. 1996) build on previous work on IHRM by drawing on concepts from the resource-based view of the firm and resource dependence to develop a theoretical model of the determinants of SIHRM systems in MNCs. Pucik ( 1992) Resource-based theory adds to prior models of SIHRM the fundamental notion that in order to provide value to the business, the SIHRM system of global firms should be constructed around specific organizational competences that are critical for securing competitive advantage in a global environment.

Gerhart (2005) suggests "application of motivation as a mechanism by which Strategic Human Resource Management SHRM practices impact organization performance. Motivation is affected by a variety of SHRM practices, including recruitment, training and development, work arrangements, compensation systems, and appraisal systems".

Evans and Doz (1992) discuss the concept of the" dualities that are at the core of complex organization and apply this to building an international competence". They argue that "HRM is a critically important tool for building dualistic properties into the firm. In terms of HRM, the key mechanism through which this can happen is layering".

According to Schuler and Tarique (2007) policy drivers in international HRM are encompassed by two objectives. One is the functional realignment arising as response to global operations and the other is the progressive development of global capabilities within business firms.Managing the employee with respect to the planning, forecasting, staffing in the both home country and host country are the major task of a good HR policy. Employees are the key asset of Organization. Retaining the talent resource in the organization for the long term is a big challenge in the global competitive industry. Compensation, Reward and other incentive programs should be framed in context with International HRM perspective. Wage increase for the employees has been increasing steadily. As Dowling et al (2009) state: "The nationality of the employee is a major factor in determining the person's 'category', which in turn is frequently a major driver of the employee's compensation".

Brewster et al (2008) note that international HR officers may require a wider knowledge base than those HR officers with a more 'domestic orientation', including:

international business context (if they are undertaking a strategic role)

international financial systems (with respect to national currencies)

international labor regulation (including minimum wages, health and safety legislation, union rights)

local labor markets (the availability of skilled labor, and technology infrastructure, will differ from country to country

Cultural differences (in Merger acquations and joint venture projects).

Brewster et al (2008) note that "As companies rely more and more on global strategies, they require more and more global leaders. This tie between strategy and leadership is essentially a two-way street: the more companies pursue global strategies, the more global leaders they need; and the more global leaders companies have, the more they pursue global strategies".

Conclusion:

Globalization is increasing every year, due to globalization FDI flow has increased, Number of Merger and Acquisition are also increasing at astonishing rat. It will lead to thousands of people and money to exchange between countries. IHRM polices and strategies are the new mantras for MNEs and SME business success. Global HR Manager and Global HR consultant are one of the demanding skills in the today's business environment. Global managers have to frame the IHRMS strategies in the long term perspective to be success in their business.