Managing Global Human Resources Essay, Research Paper

The environment in which business competes

is rapidly becoming globalized. More and more companies are entering international

markets by exporting their products overseas, building plants in other

countries, and entering into alliances with foreign companies. Global competition

is driving changes in organizations throughout the world. Companies are

attempting to gain a competitive advantage, which can be provided by international

expansion. Deciding whether to enter foreign markets and whether to develop

plants or other facilities in other countries is no simple matter and many

human resource issues surface. (Noe, Hollenbeck, Gerhart, and Wright; 534)

Doing business globally requires that adaptations

be made to reflect cultural and other factors that differ from country

to country and from continent to continent. The nature and stability of

political systems vary in character and stability, with contracts suddenly

becoming unenforceable because of internal political factors. Human resource

regulations and laws vary among countries in character and detail. In many

countries in Western Europe, laws on labor unions and employment make it

difficult to reduce the number of workers because required payments to

ex-employees can be very high. Equal employment legislation exists to varying

degrees. In some countries, laws address issues such as employment discrimination

and sexual harassment.

Cultural forces represent another important

concern affecting international human resource management. Culture is composed

of the societal forces affecting the values, beliefs, and actions of a

distinct group of people. (Mathis & Jackson, 171) Cultural differences

certainly exist between nations, but also between countries. Getting individuals

from different ethic or tribal backgrounds to work together may be very

difficult in some parts of the world. Culture is important to human resources

for two reasons. It determines the other factors ? political-legal, economic,

and education-human capital factors. Culture affects human capital, because

if education is greatly valued by culture, then members of the community

try to increase their human capital. (Noe, Hollenbeck, Gerhart, and Wright;

537) Economic conditions vary also from country to country. Many lesser-developed

nations are receptive to foreign investment in order to create jobs for

their growing populations. In many developed countries, especially in Europe,

unemployment has grown, but employment restrictions and wage levels remain

high.

The internationalization of U.S. corporations

has grown than the internationalization of human resource management. International

human resource management differs from domestic human resource management

in several ways. In the first place, it places a greater emphasis on functions

and activities such as relocation, orientation, and translation services

to help employees adapt to a new and different environment outside their

own country. Assistance with tax matters, baking, investment management,

home rental while on assignment, and coordination of home visits is also

usually provided by the human resource department. Larger corporations

have a full-time staff of human resource managers devoted to assisting

globalization. For example, McDonald?s has a team of HR directors who travel

around the world to help country managers stay updated on international

concerns, policies, and programs. The human resource department in an overseas

unit must be particularly responsive to the cultural, political, and legal

environments. Companies such as Shell, Xerox, Levi Strauss, Digital, and

Honeywell have made a special effort to create codes of conduct for employees

throughout the world to make certain that standards of ethical and legal

behavior are known and understood. (Sherman, Bohlander, and Snell; 633)

A growing number of organizations that

operate only within one country are recognizing that they must change and

develop a more international perspective. Organizations may pass through

three stages that are import-export (national) companies, multinational

enterprises (MNE), and global organizations. National companies do not

become global companies immediately. Involvement in international HRM depends

greatly on a company’s phase of globalization. Import-export firms. Firms

in the first phase of globalization simply move products across national

boundaries. The firm does not employ people in other countries, except

a few managers responsible for negotiating business agreements. These agreements

usually involve buying or selling complete products or services. Import-export

firms need to understand their trading partners’ cultures and usually must

overcome communication barriers to negotiate agreements. Negotiations are

usually done by expatriate representatives, but expatriates are not employed

as extensively by import-export firms as by multinational enterprises.

HR policies and practices remain relatively unchanged from the company’s

traditional home-base practices. (HR Magazine,06-01-1995)

Multinational enterprises (MNEs). Firms

in the second phase of globalization have strategic corporate units located

in foreign countries. Part of the firm’s goods or services may be produced

in one country, then possibly moved to another country for additional assembly,

and ultimately distributed to other countries where they are sold by employees

of the firm. MNEs typically make extensive use of expatriate managers who

are sent from headquarters to oversee foreign operations. Expatriate managers

play important strategic roles. They coordinate between subsidiaries and

headquarters, implement strategy, ensure the quality and effectiveness

of organizational control systems, and manage global information systems.

They also gain expertise in international business skills that are critical

to ensuring that top executive positions are filled by competent replacements

with the necessary international experience and perspectives. Multinational

enterprises hiring workers in foreign countries must create and administer

HR practices adapted to each country. In addition to hiring, some of the

most significant HR issues for MNEs are training a foreign workforce, complying

with the host country’s employment laws, monitoring labor costs, selecting

expatriates, and helping them and their families succeed in the new assignment.

(HR Magazine, 06-01-1995)

Global firms. Firms in the final phase

of globalization have strategic corporate units in multiple countries that

interact with both headquarters and each other. Specialized functions may

be performed in different countries – for example, engineering in one country,

research in another country and production in yet another. People and products

are moved extensively across national boundaries to meet company demands.

Global firms make moderate use of expatriate managers. Other professional

employees may also be asked to relocate. Expatriate managers provide leadership

and continuity in the various divisions. These foreign assignments help

the managers in their career development, with one or more foreign assignments

considered essential for progression to higher levels of leadership.

When organizations expand to other countries,

they must develop operations and staff the operations in those countries.

Large multinational enterprises and global organizations typically employ

individuals from throughout the world. International employees can be placed

in different classifications. An expatriate is an employee working in a

unit or plant that is not a citizen of the country in which the unit or

plant is located but is a citizen of the country in which the organization

is headquartered. A host-country national is an employee working in a unit

or plant that is a citizen of the country in which the unit or plant is

located but where the unit or plant is operated by an organization headquartered

in another country. A third-country national is a citizen of one country,

working in a second country, and employed by an organization headquartered

in a third country.

Each of these individuals present some

unique human resource management challenges. Each is a citizen of a different

country, different tax laws and other factors applied. Human resource professionals

have to be knowledgeable about the laws and customs of each country. They

must establish appropriate payroll and record-keeping procedures to ensure

compliance with varying regulations and requirements. Many MNEs use expatriates

to ensure that foreign operations are linked effectively with the parent

corporations. Expatriates are used to develop international capabilities

within an organization. Experienced expatriates can provide great talent

that can be tapped as the organization expands its operations more broadly

into more countries. Using host-country nationals is important if the organization

wants to establish clearly that it is making a commitment to the host country

and not just setting up a foreign operation. (Mathis & Jackson, 173)

Host-country nationals often know the culture, the politics, the laws,

and how business is done better than an outsider would. The use of third-country

nationals is a way to emphasize the global approach that is being taken.

These individuals are used to handle responsibilities throughout a continent

or region.

Employee recruitment in other countries

is subject to more government regulations than it is in the United States.

Regulations range from those that cover procedures for recruiting employees

to those that govern the employment of foreign labor or require the employment

of the physically disabled, war veterans, or displaced persons. (Sherman,

Bohlander, and Snell; p. 634) All countries have work-permit or visa

restrictions that apply to foreigners. A work permit is a document issued

by a government that grants the authority to foreigners to find employment

in that country. Foreign workers invited to come to perform needed labor

are the guest workers. The employment of foreigners may involve lower direct

labor costs, but indirect cost such as language training, health services,

recruitment, transportation and so on may be substantial.

The selection process for an international

assignment should provide a true picture of the life, work, and culture

to which the employee may be sent. Human resource managers should prepare

a comprehensive description of the job to be done. The description should

note responsibilities that would be unusual in home country. The responsibilities

might include negotiating with public officials; interpreting local work

codes; and responding to ethical, moral, and personal issues such as religious

prohibitions and personal freedoms. The selection process should emphasize

different employment factors, depending on the extent that one would have

with the local culture and the degree to which the foreign environment

differs from the home environment. If a candidate for expatriation is willing

to live and work in a foreign environment, and indication of his or her

tolerance of cultural differences should be obtained. The finding employees

who can meet the demands of working in a foreign environment is one of

the toughest jobs for many organizations. Many companies have been hesitant

to send women on overseas assignments. Executives assume that women do

not want international assignments, but the reality is that the rate is

equal to that of men. It is also important that companies are increasingly

using transnational teams to conduct international business. These teams

are especially useful for performing tasks that the firm as a whole is

not yet structured to accomplish. They might be used to transcend the existing

organizational structure to customize a strategy for different geographic

regions, transfer technology form one part of the world to another, and

communicate between headquarters and subsidiaries in different countries.

The fundamental task in forming a transnational team is assembling the

right group of people who can work together effectively to accomplish the

goals of the team. Many companies try to build variety into their teams

in order to maximize responsiveness to the special needs of different countries.

Employees that work in international area

face special activities as orientation and training, continuing employee

development, and readjustment training and development. The orientation

and training that expatriates and their families receive before the international

assignment begins include work adjustment, interaction adjustment and general

adjustment such as language, culture, history, and living conditions. Career

planning and continued involvement of expatriates in corporate employee

development activities are essential. One of the greatest deterrents to

accepting foreign assignments is employees? concern that they will be out

of sight and out of mind. If businesses are to be managed effectively

in an international setting, managers need to be educated and trained in

global management skills. For example, Levi Strauss has identified the

following six attributes of the global manager. Those are the ability to

seize strategic opportunities; ability to manage highly decentralized organizations;

awareness of global issues; sensitivity to issues to diversity; competence

in interpersonal relations; and skill in building community. (Sherman,

Bohlander, and Snell; 640)

Organizations with employees in many different

countries face some special compensation pressures. Variations in laws,

living costs, tax policies, and other factors all must be considered in

establishing the compensation for expatriate managers and professionals.

Even the value of the U.S. dollar can be tracked and adjustments made as

the dollar rises or falls in relation to currency rates in other countries.

Add to all of these concerns the need to compensate employees for the costs

of housing, schooling of children, and yearly transportation home for themselves

and their family members. Many multinational firms have compensation programs

that use the balance-sheet approach that provides international employees

with a compensation package that equalizes cost differences between the

international assignment and the same assignment in the home country. Unlike

the balance-sheet approach, a global market approach to compensation requires

that the international assignment must be viewed as continual though the

assignment may take the employee to different countries for differing lengths

of time.

The nature of employee and labor relations

varies form country to country. When international operations are considered,

concerns related to health safety, and security must be evaluated. It is

important to understand the applicable labor-management laws, regulations,

and practices before commencing operations in foreign countries. With more

and more expatriates working internationally, especially in the less-developed

countries, health and safety issues are arising and addressing these issues

is part of the human resource role. Another consideration is provision

of emergency evacuation services. Many global firms purchase coverage for

their international employees from an organization that provides emergency

services, such as International SOS, Global Assistance Network, or U.S.

Assist.

The role of unions differs from the unions

in the United Stated to the unions in other countries. It depends on many

factors, such as the level of per capita, mobility between management and

labor, homogeneity of labor and level of employment. Labor relations in

Europe differ form those in the United States in certain characteristics:

In Europe, organizations negotiate the agreement with the union at the

national level though the employer association representing their particular

industry. Unions in many European countries have more political power than

those in the U.S., with the result that when employers deal with the union

they are dealing indirectly with the government. There is a greater tendency

in Europe for salaried employees to be unionized.

The global expansion of IHRIM is in direct

support of IHRIM?s mission statement:

?To be, internationally, the leading association

enabling customers to achieve strategic objective through the integration

of information technology and human resource management.? (IHRIN, 05-29-2000)

WORK CITED

Cherrington, David J., Laura Zaugg Middleton.

An Introduction To Global Business Issues. http://www.elibrary.com

HR Magazine. 06-01-1995

Internet available:

http://www.ihrin.org/affiliates/index.cfm

Mathis, Robert L., John H. Jackson. Human

Resource Management. Essential Perspectives. 1st edition. South-Western

College Publishing. Cincinnati, 1999.

Noe, Raymond A., John R. Hollenbeck, Barry

Gerhart, and Patrick M. Wright. Human Resource Management. Gaining

A Competitive Advantage. 3rd edition. Irwin McGraw-Hull. Boston,

2000.

Sherman, Arthur, George Bohlander, and

Scott Snell. Managing Human Resources. 11th edition. South-Western

College Publishing. Cincinnati, 1998.