Recruitment techniques enable organizations to find the right employees based on their human resources requirements and policies. The use of the right recruitment technique enables an organization to reduce recruitment costs, find the best talent and reduce the time needed to hire new employees (El-Kot 2008, vol. 1, pp. 200-212). Thus it aims at improving the competitiveness of the organization by enabling its owners to hire the best talent in the labor market.
Currently, the main recruitment techniques used by organizations include referrals, adverts in both print and electronic media and career fairs (Piostrowski & Terry 2006, vol. 26, pp. 210-217). Other techniques include recruitment through databases, internal recruitment and contracting employment agencies.
Since organizations have varying human resource needs and financial resources, the following factors inform the choice of a recruitment technique. First, the technique should be efficient as well as cost effective (El-Kot 2008, vol. 1, pp. 200-212). Second, it should be effective by enabling the employer to find the right talent. Finally, it should be fair and legal in order to achieve the desired outcomes.
Introduction
Recruitment techniques refer to the methods used by organizations to source and hire employees. It is an important human resources management process that helps in creating competitive advantages by enhancing improved quality and productivity among employees (Piostrowski & Terry 2006, vol. 26, pp. 210-217).
This means that hiring the right workers leads to cost reduction, low turnover and less time used to recruit employees. Adopting an effective recruitment technique can enable a firm to access a large number of resumes. This increases the chances of recruiting the right employee. This paper gives an overview of the various recruitment techniques used by different organizations. The merits and demerits of each technique will be illuminated.
There are various techniques used by different organizations to hire their staff. The common factor among the various recruitment techniques is that they all involve assessments relating to the ability and behavior of the applicant (Abuzeid 2008, vol. 32, pp. 401-403). The various techniques are as follows.
Techniques
Advertisements
This involves placing adverts concerning the vacant positions in either print or electronic media (Schulz, Camp & Waltman 2008, vol. 36, pp. 501-513). In the early nineteenth century, this technique involved placing the ‘help wanted’ adverts in the classified sections of newspapers.
Thus jobseekers could find the details about the vacancies with ease. Currently, most job adverts are done online through websites. Such websites can be owned by the recruiting firm or they can be specialized websites that deal with vacancies only. Vacancies that target specific talent are usually advertised on “industry special job boards” (Abuzeid 2008, vol. 32, pp. 401-403).
The main advantage of this technique is that it enables the employer to reach “potential employees from a wide geographical area” (Schulz, Camp & Waltman 2008, vol. 36, pp. 501-513). For example, adverts placed on a website can be accessed from any part of the world. This increases the chances of recruiting the right talent. The online adverts are also cheap as compared to other recruitment methods.
The employers also benefit from the fact that the applicants using online job databases are already qualified in using computers and the internet. Recruitment through the employer’s website helps in reducing the time spent in recruiting. This is because some of the tests can be done directly through the website at the convenience of the applicant.
The disadvantage of using this technique is that placing adverts in print media is sometimes expensive. Besides, many jobseekers fail to read the adverts due to their inability to purchase newspapers or magazines with such adverts (Schulz, Camp & Waltman 2008, vol. 36, pp. 501-513). The online adverts will not be effective if the used website is not popular. Their use is also limited by the availability, cost and ease of using the internet among the targeted applicants.
Career Fairs
These are “expos that bring together employers, potential jobseekers and schools” (Lam 2007, vol. 44, pp. 993-1016). The firms participating in the expo usually provide a table or a booth for collecting resumes.
The jobseekers are usually given an opportunity to discuss the details of available positions with the potential employers. Besides, they get an opportunity to take their first interviews in regard to the recruitment exercise. Career fairs are usually organized by schools in conjunction with employers and are mainly used to hire staff for entry level positions.
The advantage of this technique is that it provides a convenient “way to collect resumes that can be used for future vacancies” (Lam 2007, vol. 44, pp. 993-1016). It is also cheap due to the fact that the costs or organizing the fairs are shared between the employers and the schools.
Career fairs give employers a chance to meet a large number of well-trained professionals and this increases the chances of finding the best employees. They also enable employers to develop relationships with school authorities. Thus the school authorities can customize their degree programs to suit the needs of the employers.
The disadvantage of this technique is that it can not be used to fill vacancies in the event of an emergency (Lam 2007, vol. 44, pp. 993-1016). This is attributed to the fact that career fairs are usually held once or twice a year. They also inconvenience employers due to the logistics involved in travelling to the schools to meet the potential employees. The fairs are usually characterized by competition due to the large number of firms participating in them. Consequently, a firm can miss the opportunity to get the best talent.
Database
This involves creating a resume database. Thus a firm using this technique will develop a filing system to store resumes or details of the applicants. The resumes stored in the database are usually collected through various methods such as career fairs, websites or direct deliveries by the applicants.
The employers normally review the database in order to find resumes of potential employees whenever they want to fill a vacancy (Dave, Patricia & Linda 2000, vol.15, pp. 162-178). The candidates who meet the desired qualifications are then contacted and interviewed for the vacant position.
This technique enables the employer to save time during recruiting (Dave, Patricia & Linda 2000, vol. 15, pp. 162-178). This is because the resumes are readily available thus saving the time spent in advertising. The availability of a large number of resumes also helps employers to eliminate the costs associated with advertising job vacancies.
The disadvantages associated with this technique are as follows. First, establishing and maintaining the database is expensive. This is attributed to the high cost of acquiring and using the right database technology.
Second, the information maintained in the database is sometimes not useful due to the time lag between the application date and the time of contacting the applicant (Dave, Patricia & Linda 2000, vol. 15, pp. 162-178). In most cases the potential employees find jobs in other organizations by the time they are contacted by the firm maintaining their resumes in a database. When this happens, the firm will be forced to start the recruitment process afresh and this leads to time wastage.
Employment Agency
An employment agency is a firm that specializes in sourcing and testing the abilities of potential employees on behalf of other firms. Thus a company using this technique will provide the employment agency with the details of the needed skills or competencies (Underhill 2010, vol. 48, pp. 338-355).
The information is then used by the agency to help their client (employer) to find the right employees. In some cases, the employer is also involved in the recruitment process especially at the last stages of the interviews and discussion of the terms of employment. The employment agencies are usually engaged on contractual basis. This means that they are only contracted whenever there is a vacancy to be filled.
This technique is suitable for positions that require technical skills or expertise (Underhill 2010, vol. 48, pp. 338-355). Thus a firm using this technique will benefit from the specialized skills of the agency to find the right talent. It also helps in saving time since the employment agencies normally maintain databases for resumes that match a wide variety of jobs. Apart from helping in the recruitment process, the agencies usually assist their clients to train the employees prior to their employment.
The demerit associated with this technique is that it involves high costs in the short-term. The agencies usually charge high fees for their services and this makes it difficult for firms to contract them (Underhill 2010, vol. 48, pp. 338-355). It can also be ineffective if the agency fails to understand the needs of the employer. This is because such misunderstandings can lead to recruitment of ineffective employees.
Internal Recruitment
Internal recruitment refers to the process of giving the existing employees a chance to fill the existing vacancies (Callaghan & Thompson 2002, vol. 39, pp. 233-254). This is done through promotions or interdepartmental transfers. In most cases the record of an employee’s past performance is used to judge his or her suitability for a particular position (Underhill 2010, vol. 48, pp. 338-355).
However, some organizations subject their employees to psychometric tests and interviews before promoting them. The promotions are normally accompanied with specialized training to help the employee to adjust to his or her new position.
The benefits of this technique are as follows. First, making use of existing employees help in saving the time used to source and hire external workers. Second, internal recruitment gives employees advancement opportunities (Freyens 2010, vol. 48, pp. 262-286). This translates into high morale and low turnover.
Third, it is easy to match the skills of existing employees to the requirements of the vacancies due to their experience within the firm (Freyens 2010, vol. 48, pp. 262-286). Finally, promoted workers are less likely to ask for high compensation as compared to external workers. Thus it can help in reducing the fixed costs associated with hiring employees.
Internal recruitment will not be beneficial if the existing employees do not have the needed skills. In such cases, the employer must recruit external workers. It also demands high level of transparency and professionalism to ensure that decisions are made on merit.
Lack of transparency can lead to corruption or nepotism during promotions and this can lead to dissatisfaction among employees. Limiting recruitment to existing employees denies the employer the opportunity to access “a wide spectrum of talent” (Freyens 2010, vol. 48, pp. 262-286).
Referrals
In this case, the employers obtain the information about potential employees from key informants (Dainty 2011, vol. 49, pp. 55-70). The key informants are people with information about the existing talent within an industry. Such informants can be existing employees, business partners or retired employees.
Most employees do not look for jobs actively. This means that the information about their abilities and skills is not available to other organizations that might be interested in hiring them (Dainty 2011, vol. 49, pp. 55-70). Thus referrals enable employers to reach potential employees who are not actively looking for jobs.
The main advantage of this technique is that it helps in reducing recruitment costs since the referrals are not paid for in most cases. This technique is suitable for positions that need specific behavior patterns such as determination (Callaghan & Thompson 2002, vol. 39, pp. 233-254). Such attributes can not be easily verified during interviews. Thus referrals enable employers to reach potential employees whose skills and behavior have already been verified.
Referrals can be misleading since they are based on the knowledge of the informant (Dainty 2011, vol. 49, pp. 55-70). This means that the employer can hire ineffective employees if the informant had insufficient information about the potential employee.
Conclusion
Recruitment techniques refer to the various methods used by organizations to source and hire employees (Piostrowski & Terry 2006, vol. 26, pp. 210-217). The benefits associated with choosing the right recruitment techniques include cost reduction, hiring the right employee and reducing the time needed to fill existing vacancies (Lam 2007, vol. 44, pp. 993-1016).
The above discussion indicates that each technique is associated with various merits and demerits. Besides, some techniques are only suitable under particular situations. For example, internal recruitment can only be used if the existing employees have the desired skills.
Thus the factors that determine the choice of a recruitment technique include the following. First, the technique must be efficient and affordable by saving both time and costs (Lam 2007, vol. 44, pp. 993-1016). Second, it should be effective by enabling the employer to find the right employee. Finally, it should be fair and legal so that decisions can be made based on merit.
References
Abuzeid, A 2008, ‘Recruitment and selection into specialty training’, Psychiatry, vol. 32, no. 2, pp. 401-403.
Callaghan, G & Thompson, P 2002, ‘We recruit attitude: the selection and shaping of routine call centre labor’, Journal of Management Studies, vol. 39, no. 2, 233-254.
Dainty, P 2011, ‘The strategic HR role: do Australian HR professionals have the required skills?’, Asian Pacific Journal of Human Resources, vol. 49, no. 1, pp. 55-70.
Dave, B, Patricia, L & Linda, M 2000, ‘The recruitment and selection of young people by small businesses’, Journal of Occupational and Organizational Psychology, vol. 15, no. 2, pp. 162-178.
El-Kot, G 2008, ‘A survey of recruitment and selection practices in Egypt’, Education, Business and Society, vol. 1, no. 3, pp. 200-212.
Freyens, B 2010, ‘Managing skill shortages in the Australian public sector: issues and perspectives’, Asian Pacific Journal of Human Resources, vol. 48, no. 3, pp. 262-286.
Lam, A 2007, ‘Knowledge networks and careers: academic sciences in industry-university link’, Journal of Management Studies, vol. 44. No. 6, pp. 993-1016.
Piostrowski, C &Terry, A 2006, ‘Current recruitment and selection practices: a natural survey of fortune 1000 firms’, North American Journal of Psychology, vol. 26, no. 4, pp. 210-217.
Schulzs, E, Camp, R & Waltman, R 2008, ‘Incremental effectiveness of two key IT recruitment methods’, Journal of Managerial Issues, vol. 36, no. 3, pp. 501-513.
Underhill, E 2010, ‘Should host employers have greater responsibility for temporary agency workers’ employment rights?’, Asian Pacific Journal of Human Resources, vol. 48, no. 3, pp. 338-355.
Globalisation, technological innovation, expansion of multinational firms, demographic shift in labour market, capital, and increased global competition among firms are phenomena that have transformed HRM practices and policies.
These factors become complex to multinational firms as they consider other factors related to local and country context. Thus, the focus shifts to cultural variables, labour market factors, regulatory factors, the structure of the industry, human resource skills, experiences, and willingness to work as expatriates.
These factors may hinder or facilitate effective roles of HRM department in implementing strategic direction for the multinational firm. Thus, the firm must be:
Globally competitive
Responsive to local needs
Efficient in operation
Flexible and adaptable
Encourage learning and knowledge transfer between the parent company and the local subsidiary
Therefore, the HRM department must facilitate flexible work practices and encourage employees’ commitment to the organisation in order to enhance effective adaptation of the local subsidiary with the parent company.
Multinational organisations face several challenges that influence HRM in the global perspective (Marchington and Grugulis, 2000, p. 1104). This implies that there is a need for integration of various practices and policies in order to ensure effective adaptation and management of human resources in the new subsidiary.
HRM remains crucial for success of multinational organisations. Past studies in multinational organisations have raised significant issues, which multinational companies must address.
First, there is an increasing need to find suitable models and frameworks, which can address various issues affecting the global management of human resources.
Second, there is also a need to develop a systematic model that recognises existing variations in international human resource practices and policies.
Third, the global HRM should rely on theoretical viewpoints for predicting and explaining various characteristics of employees across the globe.
In this research, a focus is on how the HRM department can change its policies and practices in order to accommodate a new subsidiary in a different location.
The focus on a multinational organisation also highlights international human resource management (IHRM) and strategic human resource management (SHRM) (Scullion and Starkey, 2000, p. 1061). This broad focus provides opportunities of making recommendations and suggestions for further studies.
Research Methodology
Purpose of the Study
Theories have emerged in the past few decades as attempts to provide theoretical foundations for HRM practices and policies across global borders. The main purpose of this paper is to identity HRM strategies that a multinational firm can apply in Britain after a takeover of a local insurance firm in London.
Thus, we pay close attention to differences and uniqueness of the local subsidiary. The essay also explores how the multinational firm can apply its influence from the head office to the local firm. In this context, we highlight how such actions can influence strategies, implementation, and performance of the multinational firm in the local context.
Methods
This research makes use of existing literature in the field of HRM across national borders. In this context, the research focuses on best practices in the field of HRM, which multinational firms have applied for effective incorporation of strategic HRM functions in the multinational firm.
The research reviews both theoretical and empirical studies, which account for various factors affecting HRM in multinational, such as costs, skills, recruitment, labour mobility, retention, rewards and compensation, and transfer among other factors (Vaiman, Scullion and Collings, 2012, p. 925).
Given this approach, we can understand why HRM strategies and practices in the local firms differ significantly with practices and strategies in multinational firms. The research makes use of existing studies from various parts of the world in order to show that every local firm may require a different approach to global HRM strategies rather than the standard approach of the parent company.
Thus, it is imperative for the HRM department of the multinational organisation to consider the best local practices and align them with the best HRM practices form the parent company.
Literature Review
HRM Model for a Multinational Firm
There are different views regarding HRM models for multinational firms. Therefore, the research focuses on the Schuler and other authors’ model in order to provide a clear perspective of what a multinational firm is. This definition states that:
“Any enterprise that carries out transactions in or between two sovereign entities, operating under a system of decision-making that permits influence over resources and capabilities, where the transactions are subject to influence by factors exogenous to the home country environment of the enterprise” (Schuler, Dowling and De Cieri, 1993, p. 717).
It provides a basis to show that a global HRM involves many aspects of HRM than a domestic HRM (Dowling, Welch and Schuler, 1999, p. 89). Thus, HRM departments must develop policies and practices, and administer those policies and practices across many countries. The HRM department must recognise that every country has its own legal, cultural, social, economic, historical, and political attributes.
After the takeover of Brit Insurance with Apollo Global Management, the HR policies and practices have to change in order to reflect the multinational status of the company. Thus, Brit Insurance policies and practices should reflect various aspects of HRM planning such as staffing, repatriation, performance appraisal, training and development, and compensation.
The HRM policies and practices have been the focus on many studies. However, some studies have limited research to domestic spheres. However, globalisation and the emergence of multinational firms have changed HRM practices and introduced the concept of international human resource management (IHRM).
Human Resource Planning
The HR department at Brit Insurance must address human resource planning in order to reflect multinational features of Apollo Global Management. This is a wide practice that covers staffing, appraisal, and compensation practices in the company.
Thus, IHRM must provide a comprehensive way of addressing the HRM in response to the multinational status of the company, the stage of the company growth, competitive strategies, the global structure, and the stage of organisational growth globally (Bartlett and Ghoshal, 1998, p. 204).
Some of the practices the HRM should consider are identification of crucial factors, which are significant for merger, planning career growth, creating and maintaining career development systems. In addition, the HRM department must also play a strategic role in the formulation of organisational strategic objectives (Mathis and Jackson, 2011, p. 524).
The HRM department must also manage organisational dynamic, which result from decentralisation in business units as the organisation strives to reflect both global and regional characteristics (Stone, 2010, p. 344). The HRM department must also ensure that employees have meaningful duties when appropriate in order to ensure maximum utilisation of human resources both internationally and locally.
Wong also focused on ten areas in which the HRM department should address in multinational organisations (Wong, 2000, pp. 72-74). These include the following:
Selection of candidates
Assignment and cost planning
Preparation of terms and conditions of employees’ contracts
Processing of employees’ relocation and management of vendor
Cultural and language orientation or training
Tax administration
Compensation management and payroll processing
Career guidance and planning
Handling spouse and dependants’ issues
Immigration affairs
Integrating and promoting these issues to reflect global characteristics have challenged many HRM departments (Evans, 1986, p. 105). This research shall focus on four issues the HRM department at Brits Insurance must address after the takeover.
Human Resources Management Approaches
Staffing remains a significant activity that the HRM department of a multinational organisation must consider carefully for success of the firm. Harvey and fellow authors noted that the HRM department must coordinate and control all their human resources across the globe (Harvey, Novicevic and Speirer, 2000, p. 381).
In the past, organisations used to send senior executives from the head office to ensure that the local company implemented all HR policies and maintained procedures as provided in the organisational HR policies (Brewster and Scullion, 1997, p. 72).
Scholars have concurred that the HRM department must separate various HRM practices in various subsidiaries across the globe. However, as costs of running such practices increase, it is fundamental for the organisation to use staff in the host country to fulfil these needs (Black et al, 1999, p. 178).
Apollo Global Management has its head office in the US. According to Schuler, Budhwar, and Florkowski, the US multinational companies use their employees as expatriates in global subsidiaries to take management positions for several reasons (Schuler, Budhwar, and Florkowski, 2002, p. 41).
Protect the interest of organisation
Enhance global perspectives
Offer functional perspectives
Enhance global knowledge
Develop local talent through expatriates’ training
Aid career planning
Manage new ventures
However, Apollo Global Management also has concerns regarding the best approach for selecting expatriates for foreign assignment.
Glinow and Milliman noted that many multinational corporations of the US had trouble in overseas operation. They attributed these difficulties partially to ineffective application of IHRM principles. They applied a product life cycle (PLC) approach and proposed “a two-step contingency model of the strategic and operational levels of MNCs” (Glinow and Milliman, 2009, p. 4).
These researchers discussed effective IHRM practices based on certain characteristics and needs of multinational organisations in a given environment.
Glinow and Milliman approached IHRM by using the PLC and contingency model in order to develop effective IHRM practices, which the US firms could apply overseas in order to create effective cross-cultural managerial system applicable at every stage of production (Smith, 1992, p. 39).
This shall finally create a global system that will be necessary for a competitive and dynamic global business environment.
The US multinational organisations operate in a highly dynamic and competitive global market. Therefore, there is a need for adaptation in several aspects of the organisation, especially HRM practices.
The two-step contingency model highlights how the US firms can “adapt every stage of operation through effective HRM practices” (Glinow and Milliman, 2009, p. 21). The two-step contingency model looks at strategic phase where international PLC has effects on both environmental and organisational factors of the firm.
As a result, these factors affect their strategies. Therefore, the management team and HR department have to transform organisational business plan to strategic HRM objectives. They identified both short-term and long-term strategic IHRM objectives as “planning, cost versus development and the need for integration and differentiation” (Glinow and Milliman, 2009, p. 23).
On the other hand, the model’s operational phase focused on “converting strategic HRM objectives into specific decisions” (Glinow and Milliman, 2009, p. 24).
They relied on the study of Tung when developing operational phase criteria that involved “nature of job or task, how different the host country’s culture is, the ability of the expatriate to adapt, spouse and family considerations, consideration of the host country nationals and the need for longer term developments of expatriates” (Glinow and Milliman, 2009, p. 31).
On this note, Schuler, Budhwar, and Florkowski also observe that it is necessary to consider the following factors among multinational firms.
Acceptance of foreign assignment
Foreign language
Spouse and family support
Ability to adjust overseas lifestyle
Technical and cultural competence
Team spirit
Glinow and Milliman noted that it was necessary for a global firm to conduct “continuous assessment of different IHRM practices and change them based on prevailing conditions” (Glinow and Milliman, 2009, p. 35).
Glinow and Milliman show that adopting this model may be difficult. However, it is necessary for reducing problems that senior management and executives of global firms experience when they start overseas operation.
They argue that it is best if only highly qualified employees go overseas in order to create interest in the company. This strategy shall result into “international thinking and organisational culture that values international assignments” (Glinow and Milliman, 2009, p. 35).
Caligiuri and Stroh looked at the connection between the global management practices of multinational firms and the result of IHRM practices from 46 companies. They examined four global strategies, which included ethnocentric, regiocentric, polycentric and geocentric (Caligiuri and Stroh, 1995, p. 1).
They concluded that HR practices, such as recruitment, selection, and socialization or cultural, were different due to global strategies of a firm. Specifically, they found significant differences between ethnocentric and geocentric companies.
They also observed that these two factors influenced the success of multinational firms based on profit margins, returns on capital, sales volumes, and returns on equity.
They concluded that multinational firms operating under ethnocentric strategies had low-levels of success than other firms deploying other three approaches. Therefore, they noted that it was necessary for multinational organisations to incorporate local responses into their global strategies.
Firms tended to align their global strategies with practices, which showed consistency with the overall organisational strategies in order to maintain competitive advantage (Wright and McMahan, 1992, p. 7; Daft, 2010, p. 298; Miner, 2005, p. 126).
Caligiuri and Stroh asked HR executives to explain to what extent their firms preferred to maintain their headquarters’ cultures in their global subsidiaries. They noted that ethnocentric multinational firms had significant differences from regiocentric, polycentric, and geocentric firms.
Ethnocentric firms believed that promoting the culture of the head office was a form of strategic control. Conversely, the other three types of firms did not have much difference among themselves as they favoured local integration.
According to Caligiuri and Stroh, controls from the head offices reduce the extent of multinational firms’ involvement in local activities.
Caligiuri and Stroh noted that multinational firms should conduct global recruitment in order to attract the best talents, promote global adaptation and orientation of the firm. They also observed that regiocentric, polycentric, and geocentric firms had flexible processes.
They observed that cultural diversity and foreign laws had significant control over selection processes. They also proposed further studies with large sample to analyse the influence of foreign countries’ legal, political, and cultural constraints on selection processes among multinational firms.
These authors argue that multinational companies, which promote ethnocentric ideologies in foreign countries, should re-examine their approaches and replace them with local strategies because “the parent company may not always be right” (Caligiuri and Stroh, 1995, p. 13).
Caligiuri and Stroh conclude that such re-examination can help an organisation recognize that there are other culturally diverse and right ways of running a business.
Mahmood investigated effects of “corporate strategies, structures, and international policy orientations on subsidiaries HRM practices” (Mahmood, 2009, p. 1). He specifically focused on recruitment and selection practices of global firms in their subsidiaries.
He used four European organisations conducting business in Bangladesh and discovered that multinational firms’ HRM practices relied on “the changing nature of strategies, structures and HQ’s policy orientation towards the subsidiaries” (Mahmood, 2009, p. 1).
Mahmood concluded that standardization processes in subsidiaries do not always depend on decisions of the parent companies, but rather on capabilities and importance of the subsidiary influences on the parent company’s decisions on standardization of HRM practices.
Mahmood notes that multinational firms have significant influences on subsidiaries. Attitude of the parent company on the subsidiary influences HRM practices and employees mobility across various subsidiaries. He notes that employee mobility among subsidiaries helps subsidiaries to acquire various skills from training of highly qualified employees.
Some international firms considered employee mobility during selection and recruitment processes of managerial teams as it had significant effects on employees’ placement and assignment both on the long-term and short-term basis (Mello, 2010, p. 238).
This study also noted that multinational firms had challenges in Bangladesh where HRM practices were chaotic and disorganised. As a result, most multinational firms had to apply their parent companies’ HRM practices in their local subsidiaries due to lack of HRM practices in their local contexts.
However, the relationship between the subsidiary and the head office, operational issues, and host country societal activities influenced HRM practices at the local level.
Mahmood concluded that activities of the parent company and globalisation of the subsidiary influenced the HRM practices and development of standardized practices at the local level. Mahmood noted that globalisation (internationalisation) processes of the subsidiary followed a sequential pattern with stages.
Therefore, it is necessary for multinational organisations to have various HRM practices for different subsidiaries across the globe. Therefore, it is important for multinational firms to align their corporate structures, strategies, IHRM practices, and policies.
This study presented two observations. First, subsidiaries have capabilities of earning reputations from their head offices based on their performances. Second, in some cases, the head office may trust some elements of responsibilities to subsidiaries due restructuring of the firm.
Plessis and Huntley examined IHRM within the context of South Africa and noted that employees had diverse backgrounds and experiences (Plessis and Huntley, 2009, p. 413). They concentrated on challenges, which emerged in firms due to diverse composition of employees from different parts of the globe.
These researchers argued that HR activities in multinational corporations were complex than in domestic firms as HR departments had to deal with cultural issues, pay issues, laws of the host country, working conditions of the workforce, and aligning HR practices throughout the global subsidiaries of the company.
Plessis and Huntley developed a model applicable in the context of South Africa MNCs during “the transitional stage, from domestic local to international global” (Plessis and Huntley, 2009, p. 413).
This model can act as a guideline for HR departments for “coordination and integration of leadership skills, procedures, policies, training, policies, and structures within the domestic and international firms of South Africa” (Plessis and Huntley, 2009, p. 420).
The model consists of “HR manager, production manager, service centre and business managers” (Plessis and Huntley, 2009, p. 420). However, they also pointed out that the model was flexible and not restricted to these four areas as firms could adjust it to fit their needs as required.
This model puts emphasis on the importance of HRM’s functions in developing policies, strategies, and procedures necessary for participation in the global economy. They note the importance of “aligning HR’s strategies to those of the organisation” (Plessis and Huntley, 2009, p. 413).
This model also posits that multinational firms should standardize various aspects of human resources management in order to achieve fairness within organisations. Graham and Trevor observed that such strategies are good, but organisations must use them within the context of a specific multinational firm (Graham and Trevor, 2000, p. 136).
The authors challenge HR managers of South African multinational organisations to understand “their employees’ cultural norms, pay and working conditions expectations before designing any program and set up conditions” (Plessis and Huntley, 2009, p. 423).
Domestic and international HRM practices differ. The latter is more complex than domestic HRM. Therefore, it is necessary for HRM departments to consider various aspects HRM practices so that they can develop the best relationships with employees from diverse backgrounds and cultural orientations.
Therefore, they explored the suitability of a ‘global integration strategy’ of Milkovich and Bloom 1998. They focused on how HRM department could apply it in today’s global firms (Milkovich and Bloom, 1998, p. 15).
Retention Plan
Both the parent company and the subsidiary must create a retention plan in order to address cases of potential turnover and ensure that the multinational firm sustains its workforce. The aim of the plan is to retain industrious and engaged employees.
The HRM department must provide exit surveys or interviews in order to determine causes of turnover, what employees like, what they do not like, and what they wish to change about the firm.
The HR department must coordinate with line managers in order to develop the plan. This is because managers allocate roles, targets, and responsibilities that challenge workforce. The manager must be responsible for retention because of job challenges they assign employees. The HRM department must hold managers accountable and provide incentives for high retention of desired employees.
The firm must have retention measures to prevent turnover of desired employees, which include intangible and intangible strategies as follow:
Professional mentoring, training, and development
On-the-job training
Bonus payment and perks
Telecommuting
Flexible work schedule
Reimbursement or education assistance
The company must put these strategies into action. However, it is necessary for the HRM department to protect the company through a retention agreement. This ensures that the employee serves the firm for a specific period before leaving.
Conclusion
The HRM department must extend to strategic needs of the organisation in order to achieve both goals of the organisation and those of employees. This study demonstrates that there are differences, which exist between domestic HRM and global HRM practices and policies.
Staffing of a multinational firm remains a source of major concerns for the HRM department. This requires employees with various skills, experiences, and other attributes (Gratton, Hope-Hailey, Stiles and Truss, 1999, p. 17).
The HRM department must coordinate and control these practices to reflect global characteristics of the company. Compensation and rewards also differ between expatriates and local employees. However, some scholars call for a fair compensation system across the multinational firm (Giammalvo, 2005, p. 18).
Compensation and rewards must also take into performance of employees. Dowling, Welch, and Schuler insist that the HRM department must appraise performance of all employees including expatriates in order to promote fairness in the organisation.
Another area entails the creation of synergy and teamwork among workers of diverse cultural backgrounds. However, scholars note that multinational firms should avoid ethnocentric tendencies in order to identify ability and benefits of cultural synergies in the organisation.
Repatriation of employees also presents significant challenges to HRM department (Mendenhall and Stahl, 2000, p. 251). Studies have focused on activities and qualities of the repatriation as key factors in defining careers. Some scholars have expressed concerns with the turnover of expatriates after returning home from overseas duties (Cappelli, 2008, p. 56).
Finally, training and development of employees in multinational organisations should serve as a tool of developing employees and promoting coordination of diverse aspects of a multinational firm (Li and Scullion, 2010, p. 190).
A lack of proper training has led to failure of many expatriates abroad. Thus, training and development initiatives are fundamental practices for strategic goals of the organisation and employees.
The HRM department must also account for labour relations in the US and the UK. For instance, the HRM department must focus on employees’ deployment especially in managerial roles. This also focuses on areas of legal, political, and historical characteristics of the country.
The HRM must align legal requirements with the labour laws and employees’ rights, particularly with attention to compensation, holidays, benefits, legally established insurance standards, and bargains or individual benefits.
Given these challenges, adhocracy in HRM practices and policies may be a suitable starting point for a multinational firm in a foreign land. However, it is difficult to predict the outcome of such an approach.
Reference List
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Quality human resources management is a key factor that enables business organizations and economies to gain and sustain competitive advantage. Due to the emerging high global competition, various countries are striving to strengthen their economy and record efficient and effective performance. Dedicated and organized human resource management forms one of the best strategies that most economies apply to enhance their competitive advantage (Beardwell 2004).
In Japan, human resource management is considered as a business system. In this system, the main focus is to manage and control people working in both public and private sectors so that they are able to improve their performance in terms of efficiency and effectiveness. This leads to ultimate contribution to the goals and objectives of the organizations under the economy. The Japanese HRM system is divided into the following four subsystems.
They include systems for managing employment, working conditions, reward management and evaluation of personnel. These systems serve as some of the distinguishing features in the Japanese HRM and they enhance performance thus contributing to the general growth of the economy. As a society, Japan has experienced several HRM changes and economical challenges that have enabled it move from a feudal nation to a more developed and industrialized state with developing economy (Bratton and Gold 1999).
This paper will address how the IHRM relates to the performance of the economy and identify the institutional and cultural features of Japan’s HRM. It will also address the core features of HRM practices in Japan and the multinational associations/ government influences on HRM. Finally, the paper will address the role of trade unions in Japan and the trend towards e-HRM.
HRM vs. economic performance
Human Resource Management has an empirical association and connection with the economic performance of firms and business organizations. “Considering the study that was carried out to determine the effect of human resource management practices on economic performance, it was found that effective Human Resource Management greatly contributes to the economic success of an organization” (Hollinshead 2009, p.51).
The study involved application of the Japanese and the U.S HRM practices on steel production firm to monitor the productivity of workers. In the Japanese system of HRM, human resource practices are carried out based on common grounds.
There are teams for attending to the problems of workers, orientation of workers, training and enhancing the careers of employees. There is also sharing of profits, information and rotation across the jobs. Security of the workers is highly enhanced with good working environment. On the other hand, the U.S HRM practices incorporate only one or two of the mentioned practices. Based on the application of the two systems, different outcomes emerged in terms of performance of workers.
In the Japanese HRM lines of production, high records of productivity were recorded as compared to the lines that were managed by the practices of the U.S HRM (Adler 2002). This study confirms the relation between the economic performance of a business organization and it’s HRM. A better, well organized and effective HRM will contribute to better economic performance of the organization.
This is because provision of favorable working conditions to the workers and employees like training, good payment, team work and good communication channels among other strategies enhances their performance leading to high productivity. Good HRM practices intensify the morale of workers and boost their sense of belonging to the organization thus improving their performance. Improvement in performance leads to improvement in productivity thus improved economic performance (Hollinshead 2009).
Distinctive cultural and institutional features of HRM in Japan
Contextual and cultural factors (Political, economic and technological change)
The HRM in Japan lies under the ministry of international trade and industry. It is the political power that commands this ministry. Japanese elites who have indulged in the political arena have played a very important role in terms of advocating for change in the political control of HRM. The elites have chosen various foreign and local cultural options that suit the needs of the HRM bodies in the country. Such political changes have enabled the country to attain high human resource performances thus contributing the growth of the economy (Brewster 2007).
“In terms of technology, Japan has always appreciated the emerging science and technology and at the same time maintained its unique cultural identity” (Briscoe and Schuler 2004, p.81). Japan has achieved various technological changes through research and innovations in various sectors like automobile industry. With such technological changes, the efficiency and effectiveness of the Japanese HRM has improved leading to economic improvement.
Considering economic changes, the economy of Japan experienced a major decrease in 1990s due to greater global competitions. The Japanese employment, banking and business systems almost collapsed. But following this events, Japanese HRM has been able to apply political and technological strategies to achieve economic change. The Japanese HRM is now one of the leading role models in world today (Edwards and Rees 2006).
Core cultural concepts in Japan
The version of ren is the core cultural concept in Japan. The concept involves heartedness and benevolence as cultural pillars of the organization. Under this concept, a work place is considered as a family where the management is expected to address the welfare of employees while the employees are required to have high commitment to the organization. This is to achieve peace and order at the work place (Hodgetts and Luthans 2003).
Another core concept is collectivism. The concept discourages recognition of individuals as separate entities and encourages togetherness. The workers and employees are required to embrace family spirit in the work setting. HRM emphasizes on team work, information and value sharing (Hodgetts and Luthans 2003).
There is also a cultural concept of harmonization and balancing of Yin and Yang. This concept enables the workers and employees to cope with the work setting in an adaptive and flexible manner. Another core concept is Bing Fa which enhances businesses to form effective business strategies through strategic thinking. The concept on virtues and leadership qualities enhances support from employees and collectivism (Hodgetts and Luthans 2003).
The Japanese business system
The business system of Japan is highly coordinated with high levels of interdependence between the employers and the employees. Each and every enterprise in Japan is required to incorporate qualified work force for quality production. In this case, I will discuss the Japanese business system in relation to HRM. The business system involves the employment system which deals with the HRM.
Under the employment system, the HRM requires that business organizations respect and obey the core Japanese cultural concepts which safeguards the rights of workers and employees and enhances a healthy relation between the employers and the employees.
The system emphasizes on employment procedures that select employees based on competence and qualifications (Tayeb 2005). There is also ‘working conditions’ as one of the core pillars of Japanese business system. Employers in business organizations are required to provide favorable working conditions for their workers and employees.
This is intended to enhance the effectiveness and efficiency of employees. The business system also require employers to give presents and rewards to hard working employees. They are supposed to give recognitions, bonuses and promotions for employees. The personnel evaluation system should also be set to monitor and evaluate the performance of workers and employees for continual improvement.
Finally, the business system of Japan bases on quality of products and services offered. The system requires that all business entities obtain certification of their products and services before delivering them to the customers. All business entities must conform to the standards set by the Japanese authorities. High quality products are meant for the Japanese themselves while other products are exported to other foreign countries (Hodgetts and Luthans 2003).
Essential features of working/HRM practices in JAPAN
The ‘pillars’ of Japanese employment
Recruitment
Firms and business organizations in Japan engages in thorough screening of candidates seeking for employment to ensure that they all conform to the value system and the firm’s corporate culture before being selected. In Japanese style of HRM, firms and business organizations practices job rotation, long term employment as well as team based employee activities. They also engage in implicit evaluation of the performance of employees and intensive training of recruits.
Therefore, the selection of employees is very vital since the expectation is that the recruits will remain in the organization until the time of retirement. Some major Japanese companies select employees directly from educational and technical training institutions and establishments. The only way to ensure that the recruited candidates endorses and adheres to the values of business organizations is by careful screening. Team work activities with extensive induction will be very important to the candidates (Hollinshead and Leat 1995).
Remuneration
Many firms and business organizations in Japan have installed ‘seniority’ based systems of wages. This system gives employees and workers encouragement to stay with companies and business organizations and contribute towards wage cost predictability. The remuneration system also addresses various ranges of other benefits.
Some of the most frequent benefits that are available to core employees include allowances for housing, subsidized rent, homes for holidays, company schools and some sets of shops. The business organizations and companies also offer assistance in incidences of accidents, death and other calamities that may befall workers and employees (Hollinshead and Leat 1995).
Training and development
The Japanese business organizations assume lifetime employment for their employees. This greatly contributes to the positive sentiments of training. There is a positive perception of employees as beneficial (assets) to the business. This improves the willingness of employees to train and develop human resources out of their own willingness.
The companies and business organizations collaborate with schools and training institutions to help offer training to workers and employees. The main aim of training workers and employees in Japan is to obtain all round workers who are capable of handling different kinds of jobs to enhance job transferability. Therefore, ‘multi-skilling’ in one of the core components of job rotation and it is a fundamental ingredient to the Japanese system of work (Hollinshead and Leat 1995).
Multinationals association and government influences on HRM
The human resources management and working practices in Japan have elicited a very significance influence on various organizations and human resources management boards across multi-national borders.
The lean and efficient Japanese production systems, team work organization and efficient human resources management systems have attracted many local and foreign companies. First, the local companies based in Japan bearing foreign identities have been the first ones to emulate the Japanese HRM style. The foreign business organizations have followed by following the same system.
This has created several business links and associations between Japanese HRM and that of other countries like Australia, US and the UK. There has also been considerable attention from the western part of Germany especially from international human resources managers. They have been quoted on several occasions striving to make links with the Japanese HRM (Bean 1994).
The Japanese government has also influenced its HRM in the following ways: It has created rules and regulations that support the activities of the HRM. Such regulations also tend to protect business organizations from extensive competitions from foreign firms. The government also mobilizes resources and funds that enhance the operations of bodies that monitor the activities of human resources.
This is to ensure that the country holds a HRM that is reliable and effective. There are evaluation systems from the government sector that evaluates the activities of the HRM to make it efficient and effective (Hollinshead and Leat 1995).
The role of trade unions
‘Trade union structures and membership’
Trade unions play a very vital role in Japanese HRM. Japan has realized an evolution in its trade unions in terms of enhancing labor relations. In the past, the unions concentrated on negotiating for salary increments for their members. This had drastically changed and the trade unions have taken other new measures.
Apart from advocating for the remuneration of employees, trade unions also advocate for other aspects of employees like job security, safety at work, good working environment and better employment relations. The unions are structured to work and directly relate with three main entities. Trade unions have three arms linking them to working organizations (companies and business organizations), government and their members (workers and employees).
Therefore, trade unions deal with members to ensure that their welfare is well represented and supported. They make negotiations with the government on legislations that will promote employment relations and respect for human rights at work place. They also link with the companies and organization to negotiate for better terms for their members and enhance employment relations (between the employers and the employees).
The trade union laws set in Japan only recognizes unions that support and represent employees at various levels. Although there are other small unions within organizations that support and advocate for the welfare of employees, the Japanese government require all the employees to register with at least one of the national unions that are recognized by law so that their disputes can be legally argued in the court of law (Hollinshead and Leat 1995).
Membership in Japanese trade unions involves presentation of working documents, identification documents/passport and a registration fee that is non-refundable. Other than representing and supporting workers and employees, some trade unions also engage in advising their members to save some money for a better life after retirements. They achieve this by introducing retirement schemes to employees (Harzing and Ruysseveldt 2004).
‘Moving towards e-HRM’
This involves application of IT in terms of networking to support and improve the activities of HRM. Most famous business organizations and companies in Japan are already moving towards e-HRM. They are devolving their functions to involve management as well as employees.
The employees and other forms of management can now access various selected functions of the HRM through the internet and other web technologies. This has allowed the HRM to put more emphasis on human resource strategic functions than operational functions. The employees can now access operation requirements via e-HRM. Although e-HRM has contributed towards lowering work burden and reduction in staffing levels, it has actually created unemployment to some extend (Boyatzis 2009).
Conclusion
Management of workers and employees is the major duty of HRM. Since the success of any economy, business or company depends on individuals involved, the management of these people is very crucial.
There have been extensive activities of HRM in Japan. Enhancement of HRM has led to several revolutions in the human resource sector including political revolution, technological revolution and ‘Cultural Revolution’. Enhancement of Japanese core cultural concepts of human resources management and development has greatly contributed to success in the sector of HRM.
Although the paper has discussed several distinguishing features of the Japanese HRM like lifetime employment of workers, seniority wage based system and collectivism at work, the current upcoming generations are advocating for consideration of individual as well as result based performance rather than the existing team work and group performance. This is likely to be the future topic of discussion on Japanese HRM.
References
Adler, N., 2002. International Dimensions of Organizational Behavior. 4th ed. London: CIPD.
Bean, R., 1994. Comparative Industrial Relations: An introduction to cross-national perspectives. London: International Thomson Business Press.
Beardwell, L., 2004. Human Resource Management: a contemporary approach. 4th ed. Financial Times: Prentice Hall.
Boyatzis, R., 2009. The Competent Manager: A model for effective performance. New York: Wiley.
Bratton, J. and Gold, J., 1999. Human Resource Management: Theory and Practice. London: Routledge.
Brewster, G., 2007. International Human Resource Management. 2nd ed. London: CIPD.
Briscoe, D. and Schuler, R., 2004. International Human Resource Management. 2nd ed. London: Routledge.
Edwards, T. and Rees, C., 2006. International Human Resource Management: Globalization, national systems and multinational companies. FT: Prentice Hall.
Harzing, W. and Ruysseveldt, J., 2004. International Human Resource Management. London: Sage publishers.
Hollinshead, G., 2009. International and Comparative Human Resource Management. Basingstoke: McGraw-Hill.
Hollinshead, G. and Leat, M., 1995. Human Resource Management. An International and Comparative Perspective journal, 9(5), pp. 245-263.
Hodgetts, R. and Luthans, F., 2003. International HR Management, Culture, Strategy and Behavior. 5th ed. London: Sage publishers.
Tayeb, M., 2005. International Human Resource Management: A Multinational Company Perspective. New York: Oxford University Press.
Human resource management is an organization’s function that entails all aspects that are associated with the human resource or workforce in a particular organization, company, or institution. It entails aspects like recruitment, coordination and control of the people working in an organization. Some of the issues linked with human resource management include hiring, compensation and benefits, safety and welfare, communication and motivation, employee performance management, and administration and training, among others.
Human resource management is an essential function in every organization as it enhances its overall efficiency and effectiveness through the smooth running of all the activities and operations carried out in the organization. It falls under one of the major components of the management function, which is staffing, the other ones being planning, organizing, coordination, and controlling.
The human resource in an organization is a valuable asset that determines the success or failure of the organization through their efforts towards utilizing other assets in the company. It is, however, only through their proper management that maximum efficiency, effectiveness, and profitability can be achieved (Elearn 2009). This piece of work discusses various aspects associated with human resource management, with much emphasis being given to planning, recruitment and selection processes.
Planning, Recruitment, and Selection in HR
The processes of human resource planning, recruitment and selection are very pivotal in any organization, irrespective of size. This is because they determine the quality of employees in the organization, who, in turn, determine how processes are carried out. Human resource planning involves making appropriate decisions regarding the positions an organization should fill and the best ways to fill them. It also entails determining the human resource needs of an organization with respect to the stipulated strategic plan.
Human Resource Planning
Human resource planning plays a significant role in determining the demand and supply factors of labor as well as the problems that are associated with the resolution of these factors. Human resource planning is influenced by an organization’s short-term as well as long-term operational and development needs. The employees’ and stakeholders’ needs and aspirations also play a great role in shaping the human resource planning function of an organization (Roberts, 1997).
Human Resource Recruitment
On the other hand, human resource recruitment entails attracting and encouraging eligible individuals to apply for different positions in an organization. It involves generating a pool of appropriate and qualified candidates for available job positions in an organization.
It is a process that commences when the new recruits are identified and ends when the applications from these candidates are received. Recruitment is an essential process as it facilitates the attraction of qualified candidates to apply and discourages unsuited ones from being involved by providing the right job information. Recruitment also plays a role in protecting the organization’s image.
Human Resource Selection Process
The other crucial human resource management function is the selection process. The key issue here entails matching a candidate with the job in question to achieve the best performance. There are various tools that are applied in the selection process, for instance, interviews and referrals.
The selection process is very important as it ensures that the right candidates are deployed in terms of qualifications and experience. This is achieved by matching the attributes in the application documents and the practical ones. The selection activities, all the way from the initial screening interview to the final physical examination and practices, are aimed at coming up with successful selection decisions.
For the selection process to be effective, it ought to provide a perfect match between the organizational needs and candidates’ qualifications and interests. Effective selection ensures that there is quality performance of an employee right from the start. It also avoids too much expenditure for hiring by avoiding unnecessary processes. It also prevents an organization from legal implications (from incompetent and inappropriate hiring processes) that could be very costly and time-consuming (Elearn, 2009).
The Importance of Planning, Recruitment, and Selection in Human Resource Management
From the above description of the three processes of human resource management, planning, recruitment and selection; it is evident that they contribute greatly to better performance of the employees and the organization as a whole. They are all equally important, and we cannot determine which is more crucial.
The processes are also interdependent, and they rely on each other. An effective planning process is likely to lead to effective recruitment practices, leading to an effective selection process. The reverse is also true, and a fault in one of the processes is likely to bring about failures in the others. Hence, the outcome results will be poor hiring, where the hired employees’ qualifications do not match the organizational needs. This leads to poor performance of the employees and that of an organization at large.
The Role of Recruitment, Selection, and Planning Processes – Example
To enhance the understanding of the importance of these processes, I give a situation in my workplace. Before the concepts of effective planning, recruitment and selection were adhered to in our organization, there existed a lot of problems, the leading one being employee turnover.
It was then that the management thought of identifying the reasons behind this and how the problems could be solved. The main reasons for employee turnover were the mismatch of their qualifications with the job positions leading to bad performance and, thus, lack of job satisfaction.
This was due to poor planning, recruitment as well as selection, where there was no proper identification of the organization’s needs, and hence these led to poor recruitment practices where the appropriate job information was not provided. This, in turn, led to poor selection, people would not perform as expected, and lack of job satisfaction led to instances of quitting. Another issue was a lack of motivation, where the employees never felt appreciated and valued (Mathis & Jackson, 2008).
Proper steps were taken, and the policies governing the processes of planning, recruitment and selection and the general human resource management were revised. This has improved the situation greatly, and there are very low turnover rates as most employees are suitable for their jobs and put in good working conditions that foster job satisfaction.
The impact of the above scenario has taught me a lot in regard to carrying out practices, both official as well as personal. There is a need for an individual to carry out activities having in mind the consequences of each action. Right procedures are crucial, and nothing should be taken for granted.
The Importance of Optimization of HRM for Organization & Employees
As it is clear that human resource management is a crucial element for the success of an organization, it is therefore evident that there is a need to optimize the Human Resources Management role in an effort to shape organizational and employee behavior. There are various ways through which the human resource management function could be enhanced to bring about the desired performance.
This could entail motivation of the employees, for instance, through the provision of favorable working conditions, ensuring job satisfaction, assuring them of job security, providing incentives, giving rewards for good performance as well as providing compensations, among others. Ethics and the spirit of working hard to achieve the best result possible is an aspect that should be cultivated among all stakeholders in an organization.
There have been new learning and improvements in the field of human resource management. This has been in an effort to improve the situations in organizations. The management and other responsible personnel must understand the importance of the human resource or workforce in an organization with respect to their contribution to the organization.
In the past, employment and compensation philosophy focused mainly on wages or payments. However, little consideration was given to the working conditions in which the employees worked, which is very important in enhancing the performance and success of an organization. Employees were treated merely as equipment that would be replaced every now and then.
Currently, the concept has changed, and employees ought to be treated more humanely to motivate them to perform better. Attracting and retaining quality and appropriate employees has become a major challenge faced by businesses in today’s economy, where competition is on the rise daily. An organization’s reward and compensation policy is, therefore, an important tool that should help it attract, motivate, and retain employees.
The changes in perspective through which the employees are viewed are very advantageous, and it has seen many organizations succeed in their operations. Empowerment of employees, for instance, allows for job satisfaction where they feel well-represented, appreciated, and valued.
These act as a form of motivation, and the employees are always willing to perform to their best for their own sake and that of the organization. This results in improved performance and overall success and productivity through the maintenance of efficiency, effectiveness as well as economy in the processes and practices of the organization (Roberts, 1997).
Conclusion
It is clear that human resource management is a very crucial function in an organization. The processes of human resource planning, recruitment and selection are very important as they determine the performance of an organization to a very large extent; they should, for this reason, be handled carefully to allow for their success and hence that of the organization as a whole. The processes are dependent on each other, and success in one leads to success in the other, and the reverse is also true.
The changes in the practices involved in these three practices, plus others in the human resource management docket, have been fueled by the understanding of the importance that is associated with human resources and hence the need for proper selection, hiring, and retention. The recognition that employees are the driving force toward the success of an organization has also contributed positively to the process of human resource management.
References List
Elearn (2009). Recruitment and Selection. USA: Elsevier publishers.
Mathis, R.L and Jackson, H.J. (2008). Human Resource Management. 12th ed. USA: Cengage learning
Roberts, G. (1997). Recruitment and Selection: A Competency Approach. Britain: CIPD Publishing.
Globalisation, technological innovation, expansion of multinational firms, demographic shift in labour market, capital, and increased global competition among firms are phenomena that have transformed HRM practices and policies.
These factors become complex to multinational firms as they consider other factors related to local and country context. Thus, the focus shifts to cultural variables, labour market factors, regulatory factors, the structure of the industry, human resource skills, experiences, and willingness to work as expatriates.
These factors may hinder or facilitate effective roles of HRM department in implementing strategic direction for the multinational firm. Thus, the firm must be:
Globally competitive
Responsive to local needs
Efficient in operation
Flexible and adaptable
Encourage learning and knowledge transfer between the parent company and the local subsidiary
Therefore, the HRM department must facilitate flexible work practices and encourage employees’ commitment to the organisation in order to enhance effective adaptation of the local subsidiary with the parent company.
Multinational organisations face several challenges that influence HRM in the global perspective (Marchington and Grugulis, 2000, p. 1104). This implies that there is a need for integration of various practices and policies in order to ensure effective adaptation and management of human resources in the new subsidiary.
HRM remains crucial for success of multinational organisations. Past studies in multinational organisations have raised significant issues, which multinational companies must address.
First, there is an increasing need to find suitable models and frameworks, which can address various issues affecting the global management of human resources.
Second, there is also a need to develop a systematic model that recognises existing variations in international human resource practices and policies.
Third, the global HRM should rely on theoretical viewpoints for predicting and explaining various characteristics of employees across the globe.
In this research, a focus is on how the HRM department can change its policies and practices in order to accommodate a new subsidiary in a different location.
The focus on a multinational organisation also highlights international human resource management (IHRM) and strategic human resource management (SHRM) (Scullion and Starkey, 2000, p. 1061). This broad focus provides opportunities of making recommendations and suggestions for further studies.
Research Methodology
Purpose of the Study
Theories have emerged in the past few decades as attempts to provide theoretical foundations for HRM practices and policies across global borders. The main purpose of this paper is to identity HRM strategies that a multinational firm can apply in Britain after a takeover of a local insurance firm in London.
Thus, we pay close attention to differences and uniqueness of the local subsidiary. The essay also explores how the multinational firm can apply its influence from the head office to the local firm. In this context, we highlight how such actions can influence strategies, implementation, and performance of the multinational firm in the local context.
Methods
This research makes use of existing literature in the field of HRM across national borders. In this context, the research focuses on best practices in the field of HRM, which multinational firms have applied for effective incorporation of strategic HRM functions in the multinational firm.
The research reviews both theoretical and empirical studies, which account for various factors affecting HRM in multinational, such as costs, skills, recruitment, labour mobility, retention, rewards and compensation, and transfer among other factors (Vaiman, Scullion and Collings, 2012, p. 925).
Given this approach, we can understand why HRM strategies and practices in the local firms differ significantly with practices and strategies in multinational firms. The research makes use of existing studies from various parts of the world in order to show that every local firm may require a different approach to global HRM strategies rather than the standard approach of the parent company.
Thus, it is imperative for the HRM department of the multinational organisation to consider the best local practices and align them with the best HRM practices form the parent company.
Literature Review
HRM Model for a Multinational Firm
There are different views regarding HRM models for multinational firms. Therefore, the research focuses on the Schuler and other authors’ model in order to provide a clear perspective of what a multinational firm is. This definition states that:
“Any enterprise that carries out transactions in or between two sovereign entities, operating under a system of decision-making that permits influence over resources and capabilities, where the transactions are subject to influence by factors exogenous to the home country environment of the enterprise” (Schuler, Dowling and De Cieri, 1993, p. 717).
It provides a basis to show that a global HRM involves many aspects of HRM than a domestic HRM (Dowling, Welch and Schuler, 1999, p. 89). Thus, HRM departments must develop policies and practices, and administer those policies and practices across many countries. The HRM department must recognise that every country has its own legal, cultural, social, economic, historical, and political attributes.
After the takeover of Brit Insurance with Apollo Global Management, the HR policies and practices have to change in order to reflect the multinational status of the company. Thus, Brit Insurance policies and practices should reflect various aspects of HRM planning such as staffing, repatriation, performance appraisal, training and development, and compensation.
The HRM policies and practices have been the focus on many studies. However, some studies have limited research to domestic spheres. However, globalisation and the emergence of multinational firms have changed HRM practices and introduced the concept of international human resource management (IHRM).
Human Resource Planning
The HR department at Brit Insurance must address human resource planning in order to reflect multinational features of Apollo Global Management. This is a wide practice that covers staffing, appraisal, and compensation practices in the company.
Thus, IHRM must provide a comprehensive way of addressing the HRM in response to the multinational status of the company, the stage of the company growth, competitive strategies, the global structure, and the stage of organisational growth globally (Bartlett and Ghoshal, 1998, p. 204).
Some of the practices the HRM should consider are identification of crucial factors, which are significant for merger, planning career growth, creating and maintaining career development systems. In addition, the HRM department must also play a strategic role in the formulation of organisational strategic objectives (Mathis and Jackson, 2011, p. 524).
The HRM department must also manage organisational dynamic, which result from decentralisation in business units as the organisation strives to reflect both global and regional characteristics (Stone, 2010, p. 344). The HRM department must also ensure that employees have meaningful duties when appropriate in order to ensure maximum utilisation of human resources both internationally and locally.
Wong also focused on ten areas in which the HRM department should address in multinational organisations (Wong, 2000, pp. 72-74). These include the following:
Selection of candidates
Assignment and cost planning
Preparation of terms and conditions of employees’ contracts
Processing of employees’ relocation and management of vendor
Cultural and language orientation or training
Tax administration
Compensation management and payroll processing
Career guidance and planning
Handling spouse and dependants’ issues
Immigration affairs
Integrating and promoting these issues to reflect global characteristics have challenged many HRM departments (Evans, 1986, p. 105). This research shall focus on four issues the HRM department at Brits Insurance must address after the takeover.
Human Resources Management Approaches
Staffing remains a significant activity that the HRM department of a multinational organisation must consider carefully for success of the firm. Harvey and fellow authors noted that the HRM department must coordinate and control all their human resources across the globe (Harvey, Novicevic and Speirer, 2000, p. 381).
In the past, organisations used to send senior executives from the head office to ensure that the local company implemented all HR policies and maintained procedures as provided in the organisational HR policies (Brewster and Scullion, 1997, p. 72).
Scholars have concurred that the HRM department must separate various HRM practices in various subsidiaries across the globe. However, as costs of running such practices increase, it is fundamental for the organisation to use staff in the host country to fulfil these needs (Black et al, 1999, p. 178).
Apollo Global Management has its head office in the US. According to Schuler, Budhwar, and Florkowski, the US multinational companies use their employees as expatriates in global subsidiaries to take management positions for several reasons (Schuler, Budhwar, and Florkowski, 2002, p. 41).
Protect the interest of organisation
Enhance global perspectives
Offer functional perspectives
Enhance global knowledge
Develop local talent through expatriates’ training
Aid career planning
Manage new ventures
However, Apollo Global Management also has concerns regarding the best approach for selecting expatriates for foreign assignment.
Glinow and Milliman noted that many multinational corporations of the US had trouble in overseas operation. They attributed these difficulties partially to ineffective application of IHRM principles. They applied a product life cycle (PLC) approach and proposed “a two-step contingency model of the strategic and operational levels of MNCs” (Glinow and Milliman, 2009, p. 4).
These researchers discussed effective IHRM practices based on certain characteristics and needs of multinational organisations in a given environment.
Glinow and Milliman approached IHRM by using the PLC and contingency model in order to develop effective IHRM practices, which the US firms could apply overseas in order to create effective cross-cultural managerial system applicable at every stage of production (Smith, 1992, p. 39).
This shall finally create a global system that will be necessary for a competitive and dynamic global business environment.
The US multinational organisations operate in a highly dynamic and competitive global market. Therefore, there is a need for adaptation in several aspects of the organisation, especially HRM practices.
The two-step contingency model highlights how the US firms can “adapt every stage of operation through effective HRM practices” (Glinow and Milliman, 2009, p. 21). The two-step contingency model looks at strategic phase where international PLC has effects on both environmental and organisational factors of the firm.
As a result, these factors affect their strategies. Therefore, the management team and HR department have to transform organisational business plan to strategic HRM objectives. They identified both short-term and long-term strategic IHRM objectives as “planning, cost versus development and the need for integration and differentiation” (Glinow and Milliman, 2009, p. 23).
On the other hand, the model’s operational phase focused on “converting strategic HRM objectives into specific decisions” (Glinow and Milliman, 2009, p. 24).
They relied on the study of Tung when developing operational phase criteria that involved “nature of job or task, how different the host country’s culture is, the ability of the expatriate to adapt, spouse and family considerations, consideration of the host country nationals and the need for longer term developments of expatriates” (Glinow and Milliman, 2009, p. 31).
On this note, Schuler, Budhwar, and Florkowski also observe that it is necessary to consider the following factors among multinational firms.
Acceptance of foreign assignment
Foreign language
Spouse and family support
Ability to adjust overseas lifestyle
Technical and cultural competence
Team spirit
Glinow and Milliman noted that it was necessary for a global firm to conduct “continuous assessment of different IHRM practices and change them based on prevailing conditions” (Glinow and Milliman, 2009, p. 35).
Glinow and Milliman show that adopting this model may be difficult. However, it is necessary for reducing problems that senior management and executives of global firms experience when they start overseas operation.
They argue that it is best if only highly qualified employees go overseas in order to create interest in the company. This strategy shall result into “international thinking and organisational culture that values international assignments” (Glinow and Milliman, 2009, p. 35).
Caligiuri and Stroh looked at the connection between the global management practices of multinational firms and the result of IHRM practices from 46 companies. They examined four global strategies, which included ethnocentric, regiocentric, polycentric and geocentric (Caligiuri and Stroh, 1995, p. 1).
They concluded that HR practices, such as recruitment, selection, and socialization or cultural, were different due to global strategies of a firm. Specifically, they found significant differences between ethnocentric and geocentric companies.
They also observed that these two factors influenced the success of multinational firms based on profit margins, returns on capital, sales volumes, and returns on equity.
They concluded that multinational firms operating under ethnocentric strategies had low-levels of success than other firms deploying other three approaches. Therefore, they noted that it was necessary for multinational organisations to incorporate local responses into their global strategies.
Firms tended to align their global strategies with practices, which showed consistency with the overall organisational strategies in order to maintain competitive advantage (Wright and McMahan, 1992, p. 7; Daft, 2010, p. 298; Miner, 2005, p. 126).
Caligiuri and Stroh asked HR executives to explain to what extent their firms preferred to maintain their headquarters’ cultures in their global subsidiaries. They noted that ethnocentric multinational firms had significant differences from regiocentric, polycentric, and geocentric firms.
Ethnocentric firms believed that promoting the culture of the head office was a form of strategic control. Conversely, the other three types of firms did not have much difference among themselves as they favoured local integration.
According to Caligiuri and Stroh, controls from the head offices reduce the extent of multinational firms’ involvement in local activities.
Caligiuri and Stroh noted that multinational firms should conduct global recruitment in order to attract the best talents, promote global adaptation and orientation of the firm. They also observed that regiocentric, polycentric, and geocentric firms had flexible processes.
They observed that cultural diversity and foreign laws had significant control over selection processes. They also proposed further studies with large sample to analyse the influence of foreign countries’ legal, political, and cultural constraints on selection processes among multinational firms.
These authors argue that multinational companies, which promote ethnocentric ideologies in foreign countries, should re-examine their approaches and replace them with local strategies because “the parent company may not always be right” (Caligiuri and Stroh, 1995, p. 13).
Caligiuri and Stroh conclude that such re-examination can help an organisation recognize that there are other culturally diverse and right ways of running a business.
Mahmood investigated effects of “corporate strategies, structures, and international policy orientations on subsidiaries HRM practices” (Mahmood, 2009, p. 1). He specifically focused on recruitment and selection practices of global firms in their subsidiaries.
He used four European organisations conducting business in Bangladesh and discovered that multinational firms’ HRM practices relied on “the changing nature of strategies, structures and HQ’s policy orientation towards the subsidiaries” (Mahmood, 2009, p. 1).
Mahmood concluded that standardization processes in subsidiaries do not always depend on decisions of the parent companies, but rather on capabilities and importance of the subsidiary influences on the parent company’s decisions on standardization of HRM practices.
Mahmood notes that multinational firms have significant influences on subsidiaries. Attitude of the parent company on the subsidiary influences HRM practices and employees mobility across various subsidiaries. He notes that employee mobility among subsidiaries helps subsidiaries to acquire various skills from training of highly qualified employees.
Some international firms considered employee mobility during selection and recruitment processes of managerial teams as it had significant effects on employees’ placement and assignment both on the long-term and short-term basis (Mello, 2010, p. 238).
This study also noted that multinational firms had challenges in Bangladesh where HRM practices were chaotic and disorganised. As a result, most multinational firms had to apply their parent companies’ HRM practices in their local subsidiaries due to lack of HRM practices in their local contexts.
However, the relationship between the subsidiary and the head office, operational issues, and host country societal activities influenced HRM practices at the local level.
Mahmood concluded that activities of the parent company and globalisation of the subsidiary influenced the HRM practices and development of standardized practices at the local level. Mahmood noted that globalisation (internationalisation) processes of the subsidiary followed a sequential pattern with stages.
Therefore, it is necessary for multinational organisations to have various HRM practices for different subsidiaries across the globe. Therefore, it is important for multinational firms to align their corporate structures, strategies, IHRM practices, and policies.
This study presented two observations. First, subsidiaries have capabilities of earning reputations from their head offices based on their performances. Second, in some cases, the head office may trust some elements of responsibilities to subsidiaries due restructuring of the firm.
Plessis and Huntley examined IHRM within the context of South Africa and noted that employees had diverse backgrounds and experiences (Plessis and Huntley, 2009, p. 413). They concentrated on challenges, which emerged in firms due to diverse composition of employees from different parts of the globe.
These researchers argued that HR activities in multinational corporations were complex than in domestic firms as HR departments had to deal with cultural issues, pay issues, laws of the host country, working conditions of the workforce, and aligning HR practices throughout the global subsidiaries of the company.
Plessis and Huntley developed a model applicable in the context of South Africa MNCs during “the transitional stage, from domestic local to international global” (Plessis and Huntley, 2009, p. 413).
This model can act as a guideline for HR departments for “coordination and integration of leadership skills, procedures, policies, training, policies, and structures within the domestic and international firms of South Africa” (Plessis and Huntley, 2009, p. 420).
The model consists of “HR manager, production manager, service centre and business managers” (Plessis and Huntley, 2009, p. 420). However, they also pointed out that the model was flexible and not restricted to these four areas as firms could adjust it to fit their needs as required.
This model puts emphasis on the importance of HRM’s functions in developing policies, strategies, and procedures necessary for participation in the global economy. They note the importance of “aligning HR’s strategies to those of the organisation” (Plessis and Huntley, 2009, p. 413).
This model also posits that multinational firms should standardize various aspects of human resources management in order to achieve fairness within organisations. Graham and Trevor observed that such strategies are good, but organisations must use them within the context of a specific multinational firm (Graham and Trevor, 2000, p. 136).
The authors challenge HR managers of South African multinational organisations to understand “their employees’ cultural norms, pay and working conditions expectations before designing any program and set up conditions” (Plessis and Huntley, 2009, p. 423).
Domestic and international HRM practices differ. The latter is more complex than domestic HRM. Therefore, it is necessary for HRM departments to consider various aspects HRM practices so that they can develop the best relationships with employees from diverse backgrounds and cultural orientations.
Therefore, they explored the suitability of a ‘global integration strategy’ of Milkovich and Bloom 1998. They focused on how HRM department could apply it in today’s global firms (Milkovich and Bloom, 1998, p. 15).
Retention Plan
Both the parent company and the subsidiary must create a retention plan in order to address cases of potential turnover and ensure that the multinational firm sustains its workforce. The aim of the plan is to retain industrious and engaged employees.
The HRM department must provide exit surveys or interviews in order to determine causes of turnover, what employees like, what they do not like, and what they wish to change about the firm.
The HR department must coordinate with line managers in order to develop the plan. This is because managers allocate roles, targets, and responsibilities that challenge workforce. The manager must be responsible for retention because of job challenges they assign employees. The HRM department must hold managers accountable and provide incentives for high retention of desired employees.
The firm must have retention measures to prevent turnover of desired employees, which include intangible and intangible strategies as follow:
Professional mentoring, training, and development
On-the-job training
Bonus payment and perks
Telecommuting
Flexible work schedule
Reimbursement or education assistance
The company must put these strategies into action. However, it is necessary for the HRM department to protect the company through a retention agreement. This ensures that the employee serves the firm for a specific period before leaving.
Conclusion
The HRM department must extend to strategic needs of the organisation in order to achieve both goals of the organisation and those of employees. This study demonstrates that there are differences, which exist between domestic HRM and global HRM practices and policies.
Staffing of a multinational firm remains a source of major concerns for the HRM department. This requires employees with various skills, experiences, and other attributes (Gratton, Hope-Hailey, Stiles and Truss, 1999, p. 17).
The HRM department must coordinate and control these practices to reflect global characteristics of the company. Compensation and rewards also differ between expatriates and local employees. However, some scholars call for a fair compensation system across the multinational firm (Giammalvo, 2005, p. 18).
Compensation and rewards must also take into performance of employees. Dowling, Welch, and Schuler insist that the HRM department must appraise performance of all employees including expatriates in order to promote fairness in the organisation.
Another area entails the creation of synergy and teamwork among workers of diverse cultural backgrounds. However, scholars note that multinational firms should avoid ethnocentric tendencies in order to identify ability and benefits of cultural synergies in the organisation.
Repatriation of employees also presents significant challenges to HRM department (Mendenhall and Stahl, 2000, p. 251). Studies have focused on activities and qualities of the repatriation as key factors in defining careers. Some scholars have expressed concerns with the turnover of expatriates after returning home from overseas duties (Cappelli, 2008, p. 56).
Finally, training and development of employees in multinational organisations should serve as a tool of developing employees and promoting coordination of diverse aspects of a multinational firm (Li and Scullion, 2010, p. 190).
A lack of proper training has led to failure of many expatriates abroad. Thus, training and development initiatives are fundamental practices for strategic goals of the organisation and employees.
The HRM department must also account for labour relations in the US and the UK. For instance, the HRM department must focus on employees’ deployment especially in managerial roles. This also focuses on areas of legal, political, and historical characteristics of the country.
The HRM must align legal requirements with the labour laws and employees’ rights, particularly with attention to compensation, holidays, benefits, legally established insurance standards, and bargains or individual benefits.
Given these challenges, adhocracy in HRM practices and policies may be a suitable starting point for a multinational firm in a foreign land. However, it is difficult to predict the outcome of such an approach.
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