HR and the Internationalization of Business

Most companies do business abroad. Huge firms like Procter & Gamble and IBM have long had extensive overseas operations, of course. But with the globalization of the world economy, even small firms are finding that success depends on marketing and managing overseas.

Indian firms like the Tata Group, the Aditya Birla group, RPG, Infosys, Wipro, and Satyam have moved outside national boundaries to set up manufacturing sales service, and procurement facilities across the globe. The capability to become global is a key determinant of the success of Indian firms. As a growing economy, India is also attracting global companies and people into the country.

The global challenges

Doing so presents firms with various management challenges. Plans for marketing and producing goods abroad are required. And the employer needs to install all those management system it will require to manage its overseas activities. These management systems include organization structures, managerial controls worldwide banking relationships and of course human resources management systems for recruiting, selecting, training, and appraising and compensating its workers abroad.

Managing human resources internationally creates questions and challenges. For example should we staff the local offices abroad with local or US managers? How should we appraise and pay our local employees? How should we deal with the unions in our offices abroad? And how will cultural differences abroad impact the sorts of employee selection appraisal and compensation policies we use?

Several years ago, researchers asked senior international human resource mangers, what are the key global pressures affecting human resource management practices in your firm? The three that emerged were:

Deployment: Easily getting the right skills to where we need them, regardless of geographic location.

Knowledge and innovation dissemination: spreading state of the art knowledge and practices throughout the organization regardless of where they originate

Identifying and developing talent on a global basis

Dealing with global staffing challenges like these is quite complex. In China for instance special insurance should cover emergency evacuations for serious health problems, and medical facilities in Russia may not meet international standards. So, the challenge of international human resources management doesn’t just come form the vast distances involved (though this is important) Perhaps the bigger challenge is in coping with the cultural political legal an economic differences among countries and their peoples.

How Inter country Differences affect HRM?

Companies operating only within the borders of the United States generally have the luxury of dealing with a relatively limited set of economic, cultural and legal variables. The United States is a capitalist competitive society. And while the US workforce reflects a multitude of cultural and ethnic backgrounds shared values (such as an appreciation for democracy) help to blur potentially sharp cultural differences. Although the differences states and municipalities certainly have their own employment laws, a basic federal framework helps produce a fairly predictable set of legal guidelines regarding matters such as employment discrimination labor safety and health.

A Company operating multiple units abroad isn’t blessed with such homogeneity. For example, minimum legally mandated holidays range from none in the United Kingdom to five weeks per year in Luxembourg. And while Italy has no formal requirements for employee representatives on boards of directors they’re required in Denmark for companies with more than 30 employees. The points that managers have to be cognizant of and generally adapt their human resource policies and practices to the countries in which they’re operating.

Cultural factors

Countries differ widely in their cultures – in other words in the basic values their citizens adhere to and in the ways these values manifest themselves in the nation’s arts, social programs politics and ways of doing things. For example in a study of about 330 managers from Hong Kong the People’s Republic of China and the United States, the US managers tended to be most concerned with getting the job done. Chinese mangers were most concerned with maintaining harmonious environment, and Hong Kong, managers feel between these extremes.