HR Management in Multinational Firms

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Table of Contents

Introduction
HRM Approaches to Cross-national differences
Similarity in Diversity
HR Challenges to Multinational companies in the global economy
Resolving HR Problems in Multinational Corporations
Conclusion
References

Introduction

This essay explores the relevance of the saying “when in Rome do as the Romans Do” with regard to human resource management in multinational firms. Multinational firms are organizations that operate in more than one nation. Necessarily, cultures differ from nation to nation or country to country. The import of ‘when in Rome do as Romans do’ resonates with human resource management practices in multinational firms.

In their operations, multinational firms have to conform to the diversity of cultures and beliefs in the host countries in order to avoid conflicts thus guaranteeing good working relations. Some multinationals have had challenges, even stopped operations in some countries, due to not being responsive to cultural differences. For multinationals, appreciating and understanding cultural differences is a necessary obligation towards profit maximization.

When a firm engages or rides on cultural diversity well enough, it is able to create a formidable organization. Diversity should empower and spur an organization to greater heights rather cause problems or disparage operations. When the human resource management function works on cultural differences to its advantage it helps towards minimization of loses while maximizing profit (Harris, 2007, p. 164).

HRM Approaches to Cross-national differences

Human resource management refers to efforts aimed at optimal utilization of manpower contribution in a workplace. HRM aims are optimizing personnel efforts geared at production of goods or services. For a multinational firm, it’s important to have regulations that will ensure that the working environment is conducive to the entire array of multicultural employees. Accommodation of difference is critical for maximization of productivity in a firm.

Tjosvold and Kwok (2003, p. 6) believe that respect and tolerance are a vital ingredient in dealing with individuals from other cultures. Additionally, they point out that accepting other people’s differences should be treated as a moral obligation. They point out that interaction between different cultures must be encouraged to reduce culture shocks. Harris (2007) concurs that interaction helps reduce culture related prejudices and stigmas.

He further advices that this could be achieved by organizing training programs for the employees in the host countries in order to integrate them into the work system (Harris, 2007, p. 164). Cultural immersion or induction helps improve employee’s personal skills and helps them towards appreciating other peoples’ values.

Apart from training, rewarding employees who support diversity can be a good way of encouraging people to move from their cultural safety zones. Managers have to highlight all the contributions achieved due to the diversity of the employees so as to help all realize how beneficial diversity can be (Harris, 2007, p. 165).

Cultural difference affects the way employees handle their respective duties. African Americans have their unique way of interacting that would baffle the Japanese. Therefore, cultural flexibility is an important factor to consider when hiring employees.

Recruiters have to look into finding employees that can do what roman’s do when they get to Rome. It would be pointless getting someone who is too prejudiced against Africans as head of marketing in an African country. Their prejudices will most likely come into the way of their job and affect the organization in a big way.

Another consideration human resource managers in a multinational corporation have to take seriously is homogenizing guiding principles in all the firm’s operational countries. Homogenizing procedures and principles ensures an all inclusive and unique culture is created in the organization. Any employee joining the organization from wherever meets the culture of the organization. By so doing, cultural differences only enrich the working culture in the organization as opposed to becoming an impediment.

Human resource managers have to address themselves to the issue of stereotypes. When dealing with multinational related matters, stereotypes often guide individual’s instinctual reactions. However, stereotypes only become an impediment to organizational operations if an organization has not addressed itself to them. Human resource managers have to institute systematic research and from findings implement guidelines that help workers live interact well with others from different backgrounds.

Similarity in Diversity

Warner (2005) notes that for effective running of multinational firms; human resource managers must address themselves to the psychological, financial and technological perspectives of the firms operations. He argues that the type of technology adopted in an organization determines the firms’ level of production in conformance to the local context. Not all countries are at the same level of development.

Therefore, human resource managers have to be aware of the business environment in different countries. For example, if there is a subsidiary in an African country, the kind of technology available or applicable may not be as sophisticated as what is applicable in the US. Therefore, the human resource department has to address itself to the peculiar characteristics as per business environment and get deserved employees (Warner, 2005, p. 31).

On the other hand, Warner (2005, p. 32) notes, some technical operations remain the same despite place or culture. Therefore, if an organization uses given plants, since the procedures of running such plants are the same, employees to engage in those operations can only be sourced on the basis of competence. Warner also notes that psychology also presents a certain similarity or point of integration.

Psychology is basically depended on nature of humanity; Irrespective of their cultural differences, human beings share similar requirements or needs. They are driven with the desire to fulfill individual goals. Therefore when it comes to employee motivation, the basic assumptions should apply to all employees despite cultural background. In concurrence, Moran et al (2007, p. 31), asserts that the human person will always have a drive to be successful irrespective of his or her cultural beliefs.

Based on the noted similarities, a cross cultural work force should not hamper productivity in an organization. In actual sense, diversity in the work place should add value to operations. Diversity should be a source of unconventional views that offers answers to challenges that arise as a result of assumptions or oversights. Diversity, therefore, becomes a fertile ground for quality judgment and thus strengthens loyalty (Tjosvold et al, 2003, p. 6).

Diversity does not just exist in terms of cultural differences but also in terms of skill level. There are skill differences between experts and non skilled employees in every organization, which could easily lead to a sense of rivalry. However, with proper HRM practices that lead to appreciation of difference or contribution of every individual member in organization, difference becomes asset as opposed to liability.

HR Challenges to Multinational companies in the global economy

Due to technological changes especially in the communication and transport sector, the world has become one integrated market. Most organizations are keen on becoming global players. Globalization of an organization is the process of linking an organization to the worldwide market.

With the emergence of multinational trading, the issue of sending employees to different destinations for assignments has risen. The expatriates should be well versed with the new culture they are bound to encounter in host countries.

Acquainting with the cultures in host countries enables them to be prepared in all perspective for challenges such as adjusting to new laws in the country, learning foreign language and the cultural shock associated with intermingling with the natives. If not appropriately addressed, there may arise the challenge of coping. If the expatriate cannot cope with host country culture it may cost the organization dearly either in terms of poor relations or employee replacement costs.

Even with proper prior preparations, sometimes an employee may not be able to adjust and as a result execute work poorly. Harzing and Ruysseveldt (2004) argue that such an employee becomes a liability to the parent company due to loss of business prospects and damage to company reputation. The employee may also suffer from psychological problems such as low self esteem which further affects her total output (Harzing & Ruysseveldt, 2004, p. 283).

Dickmann et al (2008) narrates that often employees who go abroad face the challenge of establishing prerequisite trust before they can work healthily with locals. He or she is treated with suspicion thus creating tension in the work place (Dickmann et al., 2008, p.20). Such issues have to be looked into by the human resource managers as it may cause poor performance and became costly to the organization.

No matter how well organizations try, it is impractical for a company to conform to all cultures. There often arise certain instances where the organizational culture clashes the culture of the people in the host country.

It is in such instances when the saying ‘when in Rome do as Romans do’ may come in handy. It is upon the human resource management to enhance assimilation of the two opposing factors (Torrington, 1994, 123). Through processes such as market research and aligning organizational objectives to market characteristics, a compromise can be reached.

Multinational companies also have to contend with the challenge of transition, because changes are the order of the day in the global market. For successful transition of any kind to take place, the concerned personnel must have the ability to multi task.

The ability to mobilize other employees, create and enhance opportunity for those with potentials and keep the firm running is of great importance. It requires the personnel to take total responsibility with minimum power in order to effect the transition in a humane manner (Harzing & Ruysseveldt, 2004, p.105).

In a multinational setting, companies are also faced with the challenge of risking misjudging their customers taste as well as being cultural insensitive. For example producing a product that the targeted consumers fail to relate with is a big disaster. Such a grave mistake causes unnecessary costs to a firm (Sparrow et al, 2004, p. 4).

The human resource function can help avert such mistakes from happening. This it accomplishes through getting employees that are familiar with host country characteristics. Apart from hiring measures, the human resource department comes in handy in keeping employees in the know and upgrading their knowledge and skills. Training and development is an excellent way of making employees responsive to host country (Brewster et al, 2000, p.21).

Resolving HR Problems in Multinational Corporations

Each multinational company needs ways of confronting and resolving HR related problems. However, from the foregoing discussions, it is clear that only context responsive programs or strategies can work.

A number of firms are confronting new challenges on a daily basis. No matter the challenge, customer needs and expectations must always be the central focus of a firm thus all strategies have to be customer orientated. Most organizations divulge focus from customer need due to pressure to utilize opportunities for expansion, harsher competitive levels and the need to conform to environmental changes.

Companies strive at keeping highly trained personnel only due to desire to keep inputs that are critical to the vision and mission of the company. Diversity of skills increases the total output of an organization. The management of most organizations, therefore, has capitalized on this factor by strategically turning it to an asset for the organization through taping into unique talents from the available variety (Mendenhall & Oddou, 1998, p. 51).

Multinational organizations incorporate the input of multifunctional personnel to secure the growth of their companies especially when breaking into new grounds. Corporate entities have also ensured that their employees are result oriented through signing of performance based contracts and giving them motivational packages for exemplary performance. Such strategies, not only boosts the morale of the employees, it also enhances their performance and the company gains through high quality end products.

Employees get appraised based on their contribution to the company. Those who perform exceptionally and show leadership potential are noted early and molded by the organization into the desired level (Armstrong, 2000, p. 234). This acts as security against employee turnover in the organization.

HR officers have the task of ensuring that the top management and work force as a whole focuses on the long term business challenges by creating tactical goals and defining the way forward for both the local and overseas subsidiaries (Certo, 2003, p.382).

Consequently, human resource managers have to aptly gather information that is specific to each part of the organization and deal with each part as per its characteristics i.e. doing what Roman’s do when in Rome. When dealing with HR issues for a subsidiary in China, the solutions have to be responsive to the characteristics of the Chinese market.

The human resource officers have to put in place a computer system that tracks the organization’s vital statistical information promptly (Storey, 1989, p. 78). They often tend to embrace the use of collective computer hardware and software that tracks the vital information of the day to day operations of the company (Tayeb, 2005, p. 98). Networking is critical towards ensuring system integration. System Integration is vital for easy generation of reports from centralized data bases.

Centralized data bases, facilitated by adoption of technological tools such as ERP packages, helps HR officers respond to issues promptly. ERP systems enable the organization to detect any anomalies at an early stage and hence act on them on time before they cause unnecessary costs to the company.

Many organizations are now adopting this system of information control to plan ahead. The system is good because it ensures that the correct information is directed to the right personnel who are then able to act upon it with speed. This smooth flow of information allows the company to evaluate the output of its employees, establish their financial status, and ensures the management makes decisions based on precise information. It is such precise information that will facilitate appropriate response to issues on a case to case basis.

Conclusion

The saying “when in Rome do as the Romans do” is sound advice when it comes to human resource management in multinational organizations. Any organization going multinational has to consider the issue of cultural diversity. The companies must be sensitive to the cultures in the host countries.

Understanding the way of life in host countries helps human resource managers to work out and establish a viable working environment for a multicultural mix of employees. If human resource management practices are not responsive to the different cultures, failure is the only possibility.

References

Armstrong, M 2000, Strategic Human Resource Management: a Guide to Action, Kogan Page Publishers, London

Brewster, C., Mayrhofer, W., & Morley, M 2000, New Challenges for European Human Resource Management, McMillan Press Ltd, London

Cengage Learning EMEA, New York.

Certo, S., C 2003, Modern Management: a Digital Focus .Prentice Hall, India

Dickmann, M., Brewster, C., Sparrow, P 2008, International Human Resource Management: A European Perspective, 2nd Ed., Routledge, Canada

Harris, M., M 2007, Handbook of International Human Resource Management, Lawrence Erlbaum Associates, New York

Harzing, A., W., & Ruysseveldt, J., V 2004, International Human Resource Management, 2^nd Ed., Sage Publication Inc, California

Mendenhall, M., A., & Oddou, G., R 1998, Cases In International Organizational Behavior, Blackwell publishers Ltd, Massachusetts

Moran, R., T., Harris, P., R., & Moran, S., V 2007, Managing Cultural Differences: Global Leadership Strategies for the 21st Century, 7^th Ed., Butterworth- Heinemann, Oxford

Sparrow, P., Brewster, C., & Harris, H 2004, Globalizing Human Resource Management, 1^st Ed., Routledge, New York

Storey, J 1989, New Perspectives on Human Resource Management, Cengage Learning, New York

Tayeb, M., H 2005, International Human Resource Management: a Multinational Company Perspective, Oxford University Press, Oxford

Tjosvold, D., & Leung, K 2003, Cross Cultural Management: Foundations and future, Ashgate Published Limited, Hampshire

Torrington, D 1994, International Human Resource Management: Think Globally, Act Locally, Prentice Hall, New Jersey

Warner, M 2005, Human Resource Management In China Revisited, Routledge, New York

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