Monday, October 28, 2019
Multinational Expansion Of Companies Essay Example for Free
Multinational Expansion Of Companies Essay Ghe increasing multinational expansion of companies requires individuals who can perform effectively across national borders by handling cross national job assignments (Stahl Bjorkman 2006). Expatriates/international assignees are employees who work outside their national borders. A lot depends on human resource (HR) management in selecting appropriate workforce and rewarding them accordingly in company’s best interests. HR managers need to show expertise in choosing suitable personnel for international assignments based on employee’s personal characteristics, interests, overseas experience and the type international assignment. Moreover, it becomes the responsibility of HR managers to look after compensation packages, and compliance with regional work standards and government policies. Hence, it is necessary to review all these issues in detail to gain an idea on the role of HR professionals in relation to international assignees. Firstly, to understand the aspects of expatriate selection and functions, it is first necessary to review the reason for global expansion of companies and their requirements. Companies Go Global            There are various reasons for companies choosing international existence. They include increased pressure on costs, search for new markets, greater customer demands and product and service qualities, government policies, search and desire for technology development, worldwide communication and information flow, increasing global opportunities with interdependence of nations in trading blocs, integrating cultures and values leading to common consumer demands, availability of skilled workforce, decreasing trade barriers, and E-commerce (Briscoe Schuler 2004).            This increasing globalization requires companies to look for employees with ability to operate at varied conditions. Accordingly, various criteria are set for the selection of international assignees. International assignees may be parent-country nationals (PCNs), host-country nationals (HCNs) or third-country nationals (TCNs) Selection of International Assignees            Human resource (HR) managers have a major role in selecting international assignees. The highly followed selection process includes self-selection, creating a candidate pool, technical skills assessment and making a mutual decision (Frazee 1998).            HR management has to consider several criterion before selecting the candidates, such as candidate’s maturity, ability to handle foreign languages, possession of favorable outlook on the international assignment by the expatriate and his/her family (Briscoe Schuler 2004). Apart from these personal characteristics like health, desire for the assignment, individual resourcefulness and adaptability are very important.            International assignees should have various qualities such as computer literacy, prudent negotiating skills, ability as a change agent, visionary skills and effective delegatory skills (Briscoe Schuler 2004). Functions of International Assignees            The functions of international assignees may include all or any of the following areas depending on job responsibilities. Technical responsibilities Managerial responsibilities Cultural responsibilities such as interacting with local nationals and local communities In general, global long term assignments may vary between two and five years. In long term assignments employees are generally loaned to the host company by the home company (Mullaney 2007, p. 3). The position and seniority of the assignee often determine the nature of the assignment package. Executive assignees are seen as prominent members of the local management team, whereas assignees at manager level or below are credited with career development opportunity. An Insight on the Roles of HR Managers In the current globalization arena, the role of human resource (HR) personnel in relation to international assignments should be viewed in specific perspectives: human resource personnel and international assignees, and the role of past experience in dealing with diverse employees. Whatever the role is, the basic requirements are openness to people, flexibility, autonomy, and career motivation (Frazee, 1998, p. 29). Firstly, the phases in selection of international assignees can be described as self-selection, creation of a candidate pool, assessment of technical skills, and making a mutual decision. Firstly, the candidate has to self analyze whether he or she can be a global assignee. Moreover, the favorability of family and other conditions need to be evaluated. In selecting global assignees, it is better to opt for self-selection than traditional selection. While traditional selection in meant for choosing assignees by employers through various interviews and tests, self-selection promotes self-assessment of candidates and decide on whether or not to go for the next step for selection process (Frazee, 1998, p. 29). The factors of self-selection include personality and individual characteristics, career and family issues. According to Johns, in case of personnel who shift from another position to HR, the experience in past positions and the change of influencing abilities pertaining to the post may help perform better as a HR manager in dealing with employees from different backgrounds (as cited in Frazee, 1998, p. 52).      Furthermore, HR managers do have a major role in proper orientation of global assignees and making them adjust with new environment. Moreover, HR personnel need to evaluate the costs associated with expatriate programs. Finally, they may have to deal with situations where employees may rise about differences in compensation between local and global assignees. Requirements of International Business Management in the Context of HR Professional in Working with International Assignees In my opinion, such requirements as workforce planning and staffing, training and health safety, and Crisis Management are the central issues of international business management in the context of HR profession when working with international assignees. The most significant subject for planning of training for international assignees is the importance of understanding the restricted culture and language. The organization of the compensation programs for multiple workforces around the world is a compound and not an easy work that is put into effect with the help of the balance sheet approach.  Health and safety practices vary among countries as per related laws in those countries. However, HR managers should understand and cope with business decisions that are concerned with strategies, health and safety systems, and different practices faced in countries that may have an impact upon workforces and employee relations between international assignees. So, the requirements include learning the laws, systems of working and understanding the cultures of the countries. Global HR activities that involve preparation, scheming, structuring, implementing, organizing, or developing may be unsuccessful if they are used without considering the differences in countries. Successful processes and systems that are used in one country may fail when they are used in the same way in another one. All the aspects of the international business have a human element. The human recourse management was underestimated for a long time, but its functions and roles, nowadays, are accepted to be one of the most important. Nevertheless, ‘the HR professionals must first learn the geography and characteristics of the field’ (Ohmae, 1990). Potential Involvement of International HRM            With the increasing human resource problems in the multinational companies due to increased global operations, it has become to necessary to redefine the scope and role of the human resource management.            International HRM should be involved as a active partner in formulating global strategies. Necessary skills need to be imparted into senior HR professional through proper training. HR professionals should lead developing processes and activities involving emerging strategies (Briscoe Schuler 2004, p. 398). Companies should facilitate the development of global strategies by finding out the skills necessary for management and employees, and a major role should be played by the HR department in accomplishing it (Briscoe Schuler 2004, p. 398). Enhanced interaction is essential among line management, HR personnel and workgroups. Moreover, it is better to decentralize the functions of the headquarters IHR departments. Also, main HR departments should assign basic administrative responsibilities to venders with expertise in HR activities, as the main departments will need to deal with many growing global responsibilities (Briscoe Schuler 2004, p. 398). Expatriate Performance, Training and Interactions Joint ventures and foreign subsidiaries are usually structured and organized much like their mother companies; the only distinction is that they have both expatriate and local managers. That’s why the international business operations are more difficult and have more complex structure than the domestic business operations. Regardless of the effectiveness or availability of Performance Management (PM) tools, expatriate PM success depends largely on the manager and expatriate in question: how well they both understand, internalize, and accept PM, and how skillful they are in its implementation. To this end, appropriate PM training should be available for all expatriates, including their superiors. (Johnson 2003). The high level of the performance management of the expatriate leads to improvements in their careers and company’s development.  The performance management system that is used in the global business includes a lot of areas of international human recourse management responsibility, such as evaluating foreign managers and international assignees for pay increases. However, one of the most important obstacles to the successful administration and progress of these managers and international assignees is the regular require of recognition of the value of their overseas experience and expatriation, in general, and the casualness with which companies often evaluate these international assignees foreign performance. Certainly, big enterprises that have a lot of overseas assignees and many foreign subsidiaries say that ‘most (83%) do not use performance management to measure international assignees success. And many (35%) dont use any type of measurement at all.’ (Andersen 1999, p. 18) One of the most important factors that influences upon the international assignees’ performance is the performance appraisal system of the company. However the correct and effective system of the performance appraisals is not an easy task even in the native country. The knowledge and the skills that have to be developed by the international assignees differ a lot from the abilities of the workers of the company that is located in the native country should have. The international assignee and other foreign managers have to increase and make use of the knowledge that is necessary for any managerial assignment without any doubt. The requirement for more number of highly qualified human resource personnel has resulted in the need to use larger numbers of foreign nationals. ‘Most multinational firms favor hiring local nationals for foreign subsidiaries, home-country nationals at headquarters, and, where a regional organization exists, a mix of foreign and home-country managers for regional positions.’ (Johnson 2003) Thanks to such method of international HR management the ethnic groups unite usually varies with the environment of a firms business and with the product strategy. So, the role of the staff that works at the native country diminishes in the case of lowering the importance of the area expertise. The principal subject for a large amount of companies in the management of their international assignment system is the arrangement of the competing interests of the firm, international HR management, and the international assignees and family. The business that is concerned about its globalization requires fast deed in order to produce innovative revenues, and to direct the expenses and threats involved with doing that. International human resource department requires adequate lead time to discover and choose successful international assignees. As Ohmae (1990) writes ‘they need a low enough case load of international assignees to be able to provide good service; they want to be able to apply an effective process for selecting and developing quality of international assignees candidates; and they desire to be able to apply a consistent policy of treatment of international assignees.’ International assignees themselves, and their families, need sufficient compensation for the individual and profession sacrifice they make while they relocate; they would like their family concerns to be given essential priority; and they look ahead to  be able to come back to a profession promotion that  takes benefit of their foreign practice. So, the way to success in the global operations is to satisfy the needs of companies and the needs of international assignees. The role of international assignees is very significant; because whether the business strategy will be clear and understandable all over the world depend on their working performance. In order to improve the results of the work there are a large amount of programs that consist of relevance, acceptability, sensitivity and practicality. The factor of relevance means that the HR manager and the worker should realize the relevance of their labor in the general activity and to evaluate the situation correctly. Acceptability is the right evaluation of the job from the side of the HR manager and the diligent execution of the duties by the expatriate. It needs to be seen as fair, reasonable, and accurate. Sensitivity is the attitude of the administration that includes taking into consideration cultural differences and adequacy in evaluating the business reality. The fact that the programs should be practical for the expatriates is also important. They should correspond to the business strategy and be not difficult to execute but not to simple. In this case there is a threat that such program will be done partially. These entire characteristics have to be implemented by the HR managers and need special attention. Compensation for International Assignees            International HR department has to create compensation packages that appropriate for employees and profitable to the companies. The components of a balance sheet approach that are helpful in determining expatriate compensation are described below. Home-country salaries International standard Regional standard Better of home or host policy Expatriate Failures The three main reasons for expatriate failure are inappropriate selection, inadequate preparation and the stress associated with expatriation (Enderwick Dunning 1994). Proper training of expatriates before giving international assignments is necessary to overcome failure. All in all, performance of international assignees depends greatly on proper selection and training. Moreover, appropriate compensation packages are necessary. Women as International Assignees            Coming to the gender differences in international assignees, there are important aspects to consider. It has been observed that though the number of women employees is increasing over the years, they are not making a substantiate percentage in international assignments. To be precise, in spite of having 47% women workforce in the United States by 1998, only 13% to 14% were selected for international assignments (Varma et al. 2004). Also, in spite of having 30% female students in MBA programs in the US, only 14% are being selected by corporate America for international postings (Koretz, 1999). Furthermore, the estimated number of female expatriates is between 2 and 5 percent only (Harris, 1993).There are multiple reasons for this scenario.            The important cause is the reluctance of management to send women employees abroad stating that they face more prejudice than men at the new workplace. Also, supervisor-subordinate relationship seems to be an important factor. It was found that female employees showed higher agreement with female supervisors than males (Varma et al. 2004). It becomes crucial, as most of cases require women to interact with male supervisors.      Other related reasons can be explained such as over estimation of women’s problems at workplace by males, and lower availability of corporate development programs such as fast track programs, individual career counseling and career planning workshops for women. Further reasons include the traditional confinement of women to only certain job categories, socio-cultural issues of host countries and the problems of dual career couples. Conclusion In conclusion it is necessary to say that global HRM is more democratic than it was earlier. It provides employees with lots of opportunities and possibilities without paying attention to such factors as cultural characteristics or racial prejudices. Global HRM tries to present cultural diversity at all level of organizations. HRM model in public sector is characterized by lifetime employment, social cohesiveness and seniority wages. The vitality of organization is less important in the country that family ties and friendship. It is seen that GCC countries are not greatly influenced by globalization processes. Managers try to promote their relatives instead of teaching staff how to work. HRM model in the private sector is only on the evolution stage. It is still trying to find innovative ways how to manage the staff effectively. It is recommended for strategic human resource management of future to be characterized by cultural diversity and equal job opportunities for all people. HRM should use the concepts of globalization and labor division in order to achieve highest results. HRM should provide qualified employees with proper positions. Human resource managers should also have highest qualification and professionalism to achieve company’s goals and objectives. One more recommendation is to create more job places and to provide people with them. The cultural dimensions of power distance index, individualism, masculinity, uncertainly avoidance index and long-term orientation are necessary to be studied by the HR managers. The improvements of the programs that are aimed at the expatriate’s learning should include relevance, acceptability, sensitivity and practicality. As the result the production will increase as well as the organization’s revenue and profits. All in all, HR management has a great responsibility in company’s success pertaining to international assignments. They need to identify required personnel with adequate skills and experience to carry out international assignments. HR managers should plan proper reward packages to retain efficient employees on international assignments. Moreover, they need to adjust existing and adopt new policies in order to gain compliance with respective country’s policies and standards. Also, they are supposed to plan and implement relevant training for employees to perform effectively as international assignees. References 1998, ‘ROI on International Assignees’, HR Focus, Vol. 75, no. 3, p. S5. Briscoe, D. R. Schuler, R. 2004, International Human Resource Management, Second Edition, Routledge, London and New York. Budhwar, Pawan. Human Resource Management in Developing Countries. London:  Routledge. Chiavenato, Idalberto. 2001. â€Å"Advances and Challenges in Human Resource Management in the New Millennium†. Public Personnel Management, 30, pp. 17-25. Dunning, Joseph. 1999. Governments, Globalization and International Business. Oxford: Oxford University Press. Eaton, Jack 2000. â€Å"Transnational Companies, Globalization and Industrial†, Comparative Employment Relations, Cambridge, Polity Press. Enderwick, P. Dunning, J. H. 1994, Transnational Corporations and Human Resources, vol. 16, Routledge, New York. Frazee, V. 1998, ‘An HR Pro Forges a Well-rounded perspective’, Workforce, Vol. 77, no. 2, p. 52. Frazee, V. 1998, ‘No Common Thread in Expat Selection’, Workforce, 4, 4, p. 9. Frazee, V. 1998, ‘Selecting Global Assignees’, Workforce, 3, no. 4, pp. 28-30. Harris, H. 1993, ‘Women in international management: Opportunity or threat?’,Women in Management Review, 8, no. 5, pp. 9-14. Hofstede, Geert.1998. International and Cross-Cultural Management Research. Sage: Jean Claude Usunier. Iii, Edward E. Lawler. 2003. Creating a Strategic Human Resources Organization: An Assessment of Trends and New Directions. Stanford, CA: Stanford University Press. Johnson, David. 2003. International Business: Themes and Issues in the Modern Global Economy. London: Routledge. Kim, Pan Suk. 1999. â€Å"Globalization of Human Resource Management: A Cross-Cultural Perspective for the Public Sector†. 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