Globalization symbolizes the structural making of the world characterized by the free flow of technology and human resources across national boundaries presenting an ever-changing and competitive business environment. A vital aspect of globalization is the way diverse challenges are being faced by nations in an increasingly inter dependent world. This easy is to provide comprehensive analysis of human resource management and its challenges in contrast with globalization. The study of International globalized Market with the cultural and legal barriers and the importance of Strategic human resource management has been despised throughout this document.
Why this is such a burning issue?
Globalization symbolizes the structural making of the world characterized by the free flow of technology and human resources across national boundaries presenting an ever-changing and competitive business environment. A vital aspect of globalization is the way diverse challenges are being faced by nations in an increasingly inter dependent world. No country can meaningfully progress today without efficiently responding to demands and pressures generated by international organizations and processes. World Trade Organization (WTO) for instance is bound to lead in a whole new system of trading relations. Human factor is the key in the new era of globalization. A conceptual framework for effective management of human resources as a response to the growing interaction of globalization and business performance is inevitable in today's world. Training is important for fulfilling strategic goals and especially during times of technological growth and development in the modern world of ever changing information and innovation in order to meet the challenges of globalization.
HRM ISSUES AND CHALLENGES IN GLOBAL MARKETS
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This millennium has possessed distinctive HRM challenges to business especially those operating across national boundaries as multinational or global enterprise. Competing in global markets demand many factors and centralization of its human resource practices is certainly vital to improve global competitiveness and empower employees for global assignments. To achieve success in global marketplace, the challenge of all businesses regardless of their size is to understand global corporate cultural differences and invest in human resources. There are certain human resource management issues that are particular for the global enterprise. The key issues involve are staffing policies, selecting and retaining talented employee, training and development whilst encouraging employees to be innovative and creative, culture barriers, and legal frame work. Others issues include understanding the challenges of living and working overseas, performance appraisals from a distance, training and management development, compensation packages, and labour relations and organized labour laws.
How Does Globalization Affect Human Resource Management
Globalization refers to the shift towards a more integrated and interdependent world economy. The drivers of the globalization are the declining barriers to the free flow of goods, services, that has occurred since the end of World War II and the dramatic technological development in recent years, particularly in the fields of communication, information processing and transportation technology (Jain and Hill, 2008). Globalization influences organizations that compete for customers with high expectations for performance, quality and cost. Globalization also exerts pressure on Human Resource Management (HRM) function to adapt to organizational needs and add greater value (Friedman, 2007).
Further globalization leads to more competition and more competition pressure to be "world-class" to lower costs, to make employees more productive, and to do things better and less expensively. As one of the expert place it, "the bottom line is the growing integration of the world into a single, huge market place is increasing the intensity of competition in a wide range of manufacturing and service industry". Firms like Dell cut off their global HR communication cost, formulating selection, training and compensation policies for expatriate employees. Managing globalization in world class firm is a major human resource challenge (Dessler, 2007).
Globalization has affected human resource management in terms of nature of work, technological advances, demographic factors, best practices and exporting of jobs.
Nature of Work
Globalization and the improvement in technology have changed the nature of work in organizations. Due to the competition pressure, organizations try to lower costs, to make employees more productive, and to do things better and less expensively. To keep costs down there has been a shift to using non-traditional workers. 'Non-traditional workers include those who hold multiple jobs, or who are "contingent" or "part-time" workers or people working in alternative work arrangement' (Dessler, 2007). In order to hold multiple jobs, workers require multiple skills and knowledge. There is a growing emphasis on knowledge workers and human capital. Human capital refers to the knowledge, education, training skills and expertise of firm's workers (Dessler, 2007). These responses have increased the necessity for employers to make more investments in skills training, to offer incentives to employees to improve their skills, and for workers to take, upon themselves, some responsibility for their own development.
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The impact globalization has made work more mobile, capable of being performed in different parts of the world without the need to actually set up physical facilities in other countries. Alternative work arrangements such as decreasing number of people working under 'permanent' contracts of employment, and the proliferation of other types of work arrangements such as part-time and temporary work, work from home and online jobs are practiced by most of the organization worldwide. Thus, traditional HR has been challenged to accommodate different types of employment contracts, and different types of pay systems to reward performance and skills. Â
Rapid development in technology has affected human resource management worldwide. Even factory jobs are demanding more technological skills, for example knowledge intensive high tech manufacturing in industries as aerospace, computers, telecommunication etc. Therefore, every industry requires highly skilled workers with good knowledge in related technologies.
Information technology has changed the way the human resource function handled in organization. The information technology can save everyone's time and expense once he or she learns how to use it efficiently. Human Resource will be impacted more than any other department.Â HR departments are harnessing technology to meet their goals to enhance efficiency and reduce cost. Systems are being implemented in the organizations such as Human Resource Information Systems (HRIS) that allow Human Resource Departments to enhance their efficiency for transportation of data, enabling them to store, manage and analyze critical employee data without requiring the user to actually maintain the data. Human Resource Department must be a leader in the implementation of emerging technologies. HR face the challenge of quickly applying the technology to the task of improving its own operations
Off-shoring refers to the exporting of jobs from developed countries to less developed countries (Hollenbeck and Wright, 2006). Competitive pressures and the search for greater efficiencies are also prompting the more employers to export jobs abroad. Most of the countries exporting high-paying service jobs to other countries, only export the work can be done at a lower cost. An example is USA exporting jobs to India particularly in information technology. The company that off-shore the work, enjoys the benefit of lower costs because the wages in developing countries is far lower than that of developed countries. The workers in the developing countries get employment. Developing countries get access to the latest technology. When exporting jobs into low-cost countries they increasingly affect also bring about competitiveness with other organizations and strategic HRM options worldwide. One of the vivid examples is that, The Shanghai Automotive Industry Corporation (SAIC) is one of the oldest and largest automotive companies. The company has 50 manufacturing plants in China producing autos, motorcycles, trucks, busses and automobile parts for both wholesale and retail. The company is also involved in car leasing and financing. SAIC has had highly successful joint ventures with General Motors (GM) and Volkswagen to produce GM and VW automobiles for the growing Chinese automobile market. The majority of SAIC's sales in the 1990's and 2000's have come from these joint ventures. In fact, driving in any major city in China shows the popularity of the GM and VW autos in that country. Yet, some analysts believe that GM and VW may have become too dependent on SAIC.
SAIC also owns almost 51 percent of the Korean automaker SSangyong also which is marketed in Sri Lanka. SSangyong stretchers further by allowing their vehicles to be assembled in Sri Lanka for the local market to maximise profits by cutting down on duties etc.. This in short relates to the trend of globalization.
Impact of globalization on HRM may come via the opening up and penetration of economies to external forces and influences. This may be two-way, with both indigenous and 'foreign' multinational enterprise (MNE) operations and investment leading to exposure to other countries' HRM practices, greater publicity and even direct importation. For the universal approach there is a set of 'best practices' that have additive and generalizable effects on performance. Furthermore, 'best practice' used by MNE can be transferred globally. Here benchmarking is seen as useful with its implicit assumption that 'best practice' effects are not firm specific, but rather universal and transferable. Without benchmarking, firms may be at a competitive disadvantage and HRM practices cannot be copied easily; hence they result in sustained competitive advantage (Bae and Rowley, 2001). In order to manage employees for competitive edge in a period of globalization, human resource personnel must possess competencies relevant for effective implementation of such strategic HRM policies and practices.
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As a result of globalization, the workforces of many organizations are more diversified, which includes women, minorities, disabled workers and immigrants. Therefore, another factor that HR needed to be concerned about is - the successful management of a diversified workforce. To manage a diverse workforce, managers must develop a new set of skills, including: communicating effectively with employees from a wide variety of cultural backgrounds. Coaching and developing employees of different ages, educational backgrounds, ethnicity, physical ability, and race; providing performance feedback that is based on objective outcomes; creating a work environment that makes it comfortable for employees of all backgrounds to be creative and innovative (Hollenbeck and Wright, 2006).
STRATEGIC HRM AS A RESPONSE TO THE CHALLENGES OF GLOBALIZATION
The world has undergone a dramatic change over the last few decades, the forces of globalization; technological changes have greatly changed the business environment. Organizations were required to respond in a strategic manner to the changes taking place in order to survive and progress. Strategic Human Resource Management (SHRM) involves a set of internally consistent policies and practices designed and implemented to ensure that a firm's human capital contribute to the achievement of its business objectives. Strategic human resources management is largely about integration and adaptation. Its concern is to ensure that:
Human resources management is fully integrated with the strategy and the strategic needs of the firm;
HR policies cohere both across policy areas and across hierarchies; and
HR practices are adjusted, accepted, and used by line managers and employees as part of their everyday work. SHRM practices are macro-oriented, proactive and long term focused in nature; views human resources as assets or investments not expenses; implementation of SHRM practices bears linkage to organizational performance; and focusing on the alignment of human resources with firm strategy as a means of gaining competitive advantage.
The global business environment today is a multi-cultural one. While general business considerations are essentially the same the world over, business styles differ greatly from country to country. What is customary and appropriate in one country may be considered unusual or even offensive in another. The increasingly competitive environment calls for an individual approach to each national market. The success of any venture outside the home market depends largely upon preparation and training within the company. Thus due to globalization HRM has to be more dynamic in terms of recruiting, training and developing the employees to assure that they can function effectively anywhere around the world. And meet the new challenges faced every day.
While general business considerations are essentially the same the world over, business styles differ greatly from country to country. An employee may be well equipped, trained and ready to face the situation, but he acts according to the challenges and the requirement of the situation as it comes. Globalization of business has increased the international competition rapidly. The organizations of today have become increasingly heterogeneous due to globalization. Some actually welcome change and the opportunities it presents, while others are reluctant to give up familiar ways of doing things. The human resource or the workers are proactive in finding out what skills and qualifications will be required to be an employee of demand in the coming situations. Thus globalization has increased the requirement of skill among employees and managers drastically. Thus we have no doubt that the roles of HRM have been affected largely by the globalization. Human resources manager of today must ensure that the appropriate mix of employees in terms of knowledge, skills and cultural adaptability is available to handle the global assignments.
The "Industry Standard" Globalization Model
Industries typically refer to "Globalization" when talking about the overall process, and "Internationalization" when describing the development of a culture-independent/world-ready application. The above model is the most accepted.
IMPLICATIONS FOR HRM PRACTICES
The role of people in the implementation of strategic responses has a significant bearing on the success rate. It is therefore imperative for organization to look at the human issues involved before implementation of any strategic responses. At this connection the question is: How can organizations effectively adopt, implement and maximize HRM practices for valued firm level outcomes? That is, how can firms increase the probability that they will adopt and then effectively implement appropriate HRM practices? ensuring that members of the HRM personnel have the appropriate human capital or competencies is one way to increase the likelihood of effective implementation of HRM practices .The future HR professional will need four basic competencies to become partners in the strategic management process. These include business competence, professional and technical knowledge, integration competence and ability to manage change.
HR professional competence describes the state-of-the-art HR knowledge, expertise and skill relevant for performing excellently within a traditional HR functional department such as recruitment and selection, training, compensation, etc. This competence insures that technical HR knowledge is both present and used within a firm
Business-related competence refers to the amount of business experience HR personnel have had outside the functional HR specialty. These capabilities should facilitate the selection and implementation of HRM policies and practices that fit the unique characteristics of a firm including its size, strategy, structure, and culture .In other words, these competencies will enable the HR staff to know the company's business and understand its economic and financial capabilities necessary for making logical decisions that support the company's strategic plan based on the most accurate information possible.
TRAINING FOR GLOBAL BUSINESS
Firms competing in a global market place, and organizations are to survive and prosper in the modern world of rapid change, they need to be more flexible, faster-moving and faster-learning than before. For that firms are implementing special global training programs, the reason for doing to avoid lost business due to cultural insensitivity, improving job satisfaction and retention of overseas staff and enabling a newly assigned employee to communicate with colleagues abroad. Providing training for employees not only helps them develop their skills and knowledge, but it is also motivational and a building block to organizational success. Global training programs opt for prepackaged programs it involves (by Gary Dessler).
â€¢ Executive Etiquette for Global Transactions: This program prepares managers for conducting business globally by training them in business etiquette in other cultures.
â€¢ Cross Cultural Technology Transfer: This program shows how cultural values affect perceptions of technology and technical learning.
â€¢ International Protocol and Presentation: This program shows the correct way to handle people with tact and diplomacy in countries around the world.
â€¢ Language Training: Language training delivered by certified instructors, usually determined by the learner's needs.
The interaction of globalization and business performance especially within the challenges from the perspectives of human resource is not neglect able. It's the key for success. If the management of human resource is fail in any organization, the organization is failed too. The rampant pace of global competition, the speeds of technological developments, rapidly changing demographics, and the incredible increase in information technology have resulted in a business environment that changes day to day, hour to hour. To remain competitive in such a dynamic environment, businesses must continually improve their human resource management systems and organizational changes. Addressing the most important and reliable resource, which is human resource management is necessary step towards facing the challenges of globalization.
Gimps on HRM in the world of Globalization
The discovery of competitive advantage through "excellence syndrome", or the idea that personnel policy must be linked to strategy and people are an asset (Keenoy, 1990). Normative HRM proposes that there is a simple, linear relationship between strategy and HRM. However, there are problems in the integration of HRM policy with business strategy and evidence indicates that HRM is more ad hoc than strategic. Whilst employment practices are changing there is doubt about the strategic focus of these changes. The soft model of HRM, suggests a relationship exists between the use of "appropriate" HRM practices and positive employee attitudes, and while theoretically these relationships remain poorly developed (Guest, 1997, 2001) the unitary framework of normative HRM which elicits that what is good for the organisation is good for employees is problematic as the needs of the business do not always coincide with the best interests of the workforce (Keenoy, 1990). It is evidence to indicate that there is a gap between rhetoric and reality in workforce management. Research has shown that HRM rhetoric is generally soft and reality mainly hard. Even when implementation appears soft, such initiatives are often constrained by a hard framework. Consequently we see that Total Quality Management whilst promoting empowerment delivers increased management control and job related training can increase without considering the development needs of employees required by the concept of 'employability' which has replaced organisational career paths. These dilemmas mirror the contradictions with normative HRM itself, which is unable to deliver its dual promise of maximising the contribution of human resources to achieve business strategy.
Evidence of Globalization Characteristics (how globalization has wide spread? Throughout the world or the impact of globalization? ) or can we say " types of changes globalization has brought into the world?"
â€¢ The technical developments of global systems of communication and transportation; The change from local, regional, and national economies into a global economy thereby increasing interaction among societies.
â€¢ The world-wide political interdependence that is altering traditional boundaries between domestic and international politics;
â€¢ The impact of human activity upon the planet's ecosystem and the constraints on human activity imposed by limits of the system;
â€¢ The power of art and popular culture to communicate common affective and cognitive experiences around the globe.
One method of coping with globalization is the education on the subject. Global education and international education are complementary approaches with different emphases. The terms global education and international education are used to describe strategies for:
gaining knowledge of world cultures;
understanding the historical, geographic, economic, political, cultural, and environment relationships among world regions and peoples;
examining the nature of cultural differences and national or regional conflicts and problems; and
Acting to influence public policy and private behaviour on behalf of international understanding, tolerance and empathy.
Multicultural Education: Multi-cultural education is a closely related approach that explores the interactions among differing cultures within a political region.
Second Language Learning: Here the primary object of study is language as a form of communication and as a powerful vehicle of culture and identity. The major goal of second language learning is the development of both the language skills and the cultural understandings needed to function in and to appreciate another culture. In addition to study of the linguistic structure, the second language classroom integrates experiences that focus on patterns of everyday living, such as social mores, occupations, and family live, as well as history, literature and the fine arts. Students are encouraged to compare another culture with their own in order to gain a better understanding of both.
Globalization has increased the connectivity and interdependence of the world's markets and business. Globalization has its positive side as well as its negative side. It affects the economic dimensions; that is trade, finance, aid, migration and ideas. Increase in these dimensions of globalization, if managed in a way that supports development in all countries, influences organizations that compete for customers with high expectations for performance, quality and cost. With the acceleration of globalization, organizations have had to change and new trends have set in, even in the management of human resources. Globalization also exerts pressure on Human Resource Management (HRM) function to adapt to organizational needs and add greater value. Globalization has affected the human resource management in terms of nature of work, technological advances, exporting jobs, best practices and demographic factors.