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Abstract
The current trend in globalization exposes multinational companies to several human resource management issues, especially when opening new branches in other countries. First of all, the objective of the paper is to investigate the application of global human resources management issues in World Cuisine (WC) multinational company.
Secondly, the methodology of carrying out the study involved the literature review, case study analysis and discussion of the results obtained using global trends. The process of obtaining data involved the selection of appropriate resources from secondary sources such as books and case study material.
In the study, four issues namely, global human resources movement, expatriate management, localization and global skill developments were tackled.
Thirdly, it was established that the most critical aspects that should be adopted by WC include: Selecting employees with the most suitable skills; using expatriates as mentors; addressing skill shortage; and working towards retaining key employees. Employees at WC will have a boosted morale and consequently, an improved performance when these techniques become implemented.
Introduction
In today society, in order to broaden a business, most companies try to expand their company to go international. As a result, that company will become a multinational company (MNC’s). One from a thousand MNC’s is World Cuisine; this company is a multi-brand restaurant chain that has a headquartered in United States of America.
Furthermore, they engaged in a fast food industry for many years and some of the most favourable brands such as, KFC, Pizza Hut, A&W are in their subsidiaries. In current situations, World Cuisine tries to broaden their business by expanding to China which have more than billions citizen.
In this case, their expansion is based on the assumption that, more higher the numbers of population mean that the companies have more possibility to get more customers. Moreover, World Cuisine has been categories as a successful company in expanding their business in their home country. However, there are some international human resource management issues regarding the expansion to China as a host country.
Recent business becomes widened and complex. The complexity that occurs is because currently, most of the business not longer have local perspective but have global perspective.
Mead (1998) state that to successfulness in managing globally which has many cultures in it; companies should has the capability to attract and motivate they employee in their subsidiary level. According to Mead (1998) there are several factors that need to focus on, in order to gain competitive advantages. The factors are:
Synergy
Synergies between two companies should be established. A collaborating from a cultural diversity could be a competitive advantage for the companies. However conducting a policy to create synergy between the companies is very hard to make.
Task Factors
A cultural diverse group is more effective than a non-cultural/single group in terms of solving a complex task as a single group is better while solving routine task.
Cultural Factors
Based on the cultural backgrounds, cultures from Asia, Afro, Hispanic, are group-centric. While, Anglo-American is more individuals. In terms of task that need a cooperative behaviour Asia, Afro, Hispanic respectively are tended to raise their level of cooperative yet Anglo-American did not.
Ignoring Diversity
Conducting a successful management of diversity has many things to cope, not only the process it self is very hard to establish but also it also expensive in terms of adjusting time, training cost and mistakes.
Human Resources is an important resources in the company, therefore when a company want to broaden the business Human resources need to be manage effectively. In terms of Global Human Resources Management, Lasserre (2007) state that there are four issues that company needs to pay attention on:
Global Human Resources Movement
In Multinational Enterprise movement of personnel is very important. A decision about choosing the right man for the right job is crucial. Deciding the right personnel is vital because, it will drive the affiliate company implicitly. According to Lassere (2007) there is three staff, which the main workers for company movement, there are:
Local managers and staff
This staffs usually employed at subsidiary level, because of their core mainly in the local companies.
Global managers
Their main aims is to create a successive opportunities in different countries, so the business in other country can smoothly developed.
Temporary assignees
Detached staffs are employees, which employ as temporary workers in the subsidiaries level.
The movement of these staff depends on the company needs. Furthermore, Edstrom and Galbraith (1977) state that companies have various reasons to do employee transfer. The reason which usually appears behind the movements are:
- Fill the position that local individuals are not easy to train. This situation can be found in a company, which operates in developing countries.
- Improve the managers’ ability in international business, due to gain long-term international experience.
- Modifying and creating a sustainable process both structure and decision making, especially for competition between worldwide products against national product.
Furthermore, Edstrom et al (1977) also added choosing the right man for subsidiary company is important. So, the transfer policy that a host company make should be under deep consideration.
Table. 1 Dimension of Transfer Policies (Edstrom et al, 1977)
Expatriate Management
Managerial position is critical, in terms of company progression. Usually, a company will delegate one of their employees to be a leader in the parent company. It is know as expatriate management. The adaptation process of the managements with their new environment is vital in Global Human Recourses management.
Moreover, Lasserre (2007) state that conducting clear policies is important due to gain benefits from the company or the individuals. Those policy have to consist six components, there are:
Strategic Vision
This policy situates the expatriate’s assignments in the company’s global strategy framework. The assignment based on the global positioning and management style of the organizations.
Selection and Preparation
There are seven critical factors in order to success in expatriate management:
- Tolerance with uncertainty and complexity.
- Have the ability to handle both situation and demand in the foreign country.
- Have a goal orientation.
- Have a willingness to maintain social relationship.
- Require sensing other peoples’ feelings, thoughts and motives.
- Not being judgemental toward others.
- Require an ability to clarify different perceptions to maintain communication level.
Compensation
The expatriate has several clauses in their contract. The clauses consist of the expatriate remuneration, living and accommodation cost. The contract should be synergize with the working condition, which the expatriate located in.
Duration
According to Lasserre (2007), there are four key points, what kind of activity that the expatriate has to do during the period:
- The time needed to learn the regulations in the host country and build the relationship with business entities.
- The time needed to create a relationship in the job and conduct a sustainability of the task that has been created.
- The adaptation time
- The company’s policy in terms of career development.
Support
The home company has to give a decent support and understanding to the management. The most important support that the expatriate management needs is a feeling of not being forgotten or marginalized.
Career Follow-up
After the end of the duty, the expatriate managers would be back to the home country. The problem that would be a raise is how the company would respond with their skills and performances, this problem also known as repatriation problem.
Furthermore, the development of expatriate managers depends on the capability to design and manage the company global human resource systems (Nancy and Bartholomew, 1992). Nancy et al (1992) state that transnationally manager is a company needs nowadays, because transnationally have more skills and duties more than expatriates in the past, which shows in table 2.
Table 2. Transnationally Competent Managers (Nancy et al, 1992)
Localization
In order to break a new market, barriers must be demolished. Gamble (2000) believe that local people can run the company far more effective than the expatriate, so this situation is going in terms of reducing the cost. Moreover, Gamble (2000) also states that there are four issues that in practice localization have, there are:
Skills Shortage
Having a qualified local managers in the host countries are very hard, especially in developing countries.
Poaching and Labour Turnover
Due to lack of competent local managers, companies that have already a capable local managers facing a difficulties to retain them. This people have realized their value in the market, so they want a better salary, which increase the company expenses.
Scrutiny and Control
This issue is common in the subsidiary level, which located in developing countries. A good control will diminish the cultural difference between expatriates and locals
Training and Teaching
A company that expand overseas like to ensure that they global standards can be accepted into they local environment. The company shall import all the knowledge not only technical skills but also management techniques. In order to success this objectives physical experience from the expatriates is highly needed.
Lassare (2007) states that cultural divergences should be handle carefully. According to Lassare (2007) there are four areas that this situation could be found:
Giving and Receiving Feedback
In terms of evaluation process, western performance used to do a meeting between the supervisors and employees. Due to the cultures background, oriental feels that those process is not polite.
Individual versus Group Performance
When doing an assignment western is more individualistic, while non-western is focus on group performance.
System-Led versus Personalised Evaluation Processes
In Asia Pacific region, employees are more loyal to a person or a group rather than to a organization.
Social Impact of Rewards or Sanctions
In terms of rewards and sanctions, Asia is very sensitive with that, because in their cultures blame in front of others like their colleagues is unacceptable.
Global Skill Development
A comprehend of organization roles is necessary to conduct. Both organizational roles and individual characteristic have to synchronize due to optimizing the company performance. This condition need to be achieve because, in the global business the managers task is not only to recognize the opportunities but also to coordinate skills activities and link capabilities across the barriers.
The four issues above are issues that companies have to concern on. The Global Human Resources Management is an important issue that have to treat carefully and effectively.
Case study analysis and way to overcome
There are four main issues that have been pointed out such as, Global human resource movements, expatriate management, localization and global skill development. Moreover, it is consider necessary to provide solutions to overcome those issues. Therefore, in this segment solution of each issue will be provided in different segment.
Global human resource management
World Cuisine (WC) which struggling facing this issue may need to react quickly seeing that placing the right man in the right position is a crucial concern. It may leads to several drawbacks for the company.
For example as an illustration, an employee that has been chosen as an manager in company “A” since the management of the company considered that she/he is a hard working person who able to finished all the task that has been planned by the management.
However, this person is typically “worker” that just able to work under command, in other word she/he just able to complete the task that has been made available by the management not creating their own task. As a result, the lack of efficiency will appear in the work place as she/he may feel uncomfortable and end up in low performance work. Therefore, WC needs to find a solution to overcoming these conditions.
As a suggestion to overcome this issue is using the human resource planning method that based on two main question which that is how many people and what kind of people that WC needs to broaden their business. According to Mills (1983) that cited in Armstrong (2001), there are three important activities plus right decision making process that helps planning the human resource.
Start with; discover the precise number of employees that needed in the company and also those employees need to have the suitable skills that suit with the company requirements. At the end, follow up the employees that have been selected to reach higher performances. Those steps may cover global human resource management issues that being facing by WC.
Expatriate management
After having the right person in the right place using human resource planning method, WC still needs to think due to expatriate management issue. It is because, as an expatriate she/he may facing kind of culture shock in the host country; furthermore, for some expatriate who work in WC is not American, therefore they will become the third country national expatriate in China.
Moreover, different culture is not the only reasons why they are struggling in the host country, some other reason is the skill competencies that each of the expatriate have in as their ability. For example, the subject or some material that they specialize on is really important for them in order to deliver the information to the new employees in the host country, also the communication problems that may occur.
When all the things getting worse, the negative impact from the expatriate may occur and which may impact on the WC expansion. Having said about the culture shock, WC needs to have some solution to answering those problems.
In order to support WC expansion to China, there are some solutions to cater these problems. Begin with considering expatriate as a human being that also have social live and different needs to coloring their live. Therefore, having a well prepared candidate as an expatriate is a suitable option.
Start with recruiting candidates for expatriate in China and puts some requirements that has been necessarily considered as an important factor to determine the candidates; therefore, the candidates realize their responsibility as an expatriate and do it by their own desire without any pressure from any side.
Moreover, it is also need to have candidates whose has a strong verbal communications skill to penetrate in to new working group in the host country. It is because the common problem from the MNC’s company is communication and it needs to be realizing that the employees may come from different country, so an excellent communication skill is vital.
After having the right candidates for expatriate, try also to maintain the duration to work as an expatriate, since as a human they also have their own limit; even though, WC has selected the best candidates for expatriate.
The last step is to put an expatriate not only in a vital position but also try to puts an expatriate as a mentor. Instead of having an excellent expatriate in the host country, as a mentor the expatriate can empower the local employees to integrate better in the workplace.
Localization
Others issue that WC facing is related to the skill shortage. Moreover, this problem occurs as difficulties to find a local manager, considering that china is a developing country. However, WC still wants a local employee as manager in their company. In fact, that is a brilliant idea to put a local as a manager in new business territory as they have more knowledge about the society and easier to find a way to penetrate the market.
In other hand, needs to be remembered that not only just pick and choose the local as a manager, but also they need to pass the criteria that has been done by the management such as communication skill. The communication skill has been chosen as the basic requirement because it is the best option to makes every single person in the company has the same information, in other word the information evenly spread.
Hence, it reduces the misinterpretation in the group. Actually how to overcome these issues has been cover by providing expatriates as a mentor, instead of being capable to do a training, expatriate also able to assist the local manager and at once can also controlling as an double check what the manager has been done.
But it does not mean that the expatriate has a full control of the manager, because if that happen, another issue may arise. In point of fact what the expatriate do is to transfer al the company knowledge from the home company to the host company by providing training and mentoring to make the company being acceptable in the local environment.
Global Skill Development
According to Maslow hierarchy of need’s theory, there are five general stages that been concerned by majority of the employees such as, physiological, safety, social, esteem and self-actualization needs. In current situation, WC is one of the biggest MNC’s in the world that has fulfilled all the lower level employees’ needs.
Therefore, one of the stages that is related to the issue in global Skill Development in WC is the self-actualization which is the higher level needs in Maslow’s hierarchy theory. In this stage actually money is not the number one issue, but the things that really matter is about the skill development that never have the end.
For the illustration, WC that starts with selecting candidates with high quality, train them and now the employees has become an excellent human resource that fully train and gain the experience. In order to reduce the employees turn over and reduce the cost of retraining the new staff because loosing the key employee, the only thing is to keep the key employee in the company.
Therefore, WC needs to realize the way to maintain the key employee and start to find some solution. Begin with providing a career management as the first step, in this steps again money is not a problem, but how to pay fairly is the case. Fairly paying the salary is one of the good ways to appreciate the experience that been acquired by the employees.
Moreover, by providing a career or a chance of promotion in the company it may create some competition in the workplace, as long as the competition situation is under control it can produce a good result.
The purpose of this kind of competition is to stimulate employees’ motivation, so they can feel the excitement in their workplace. Another option is to provide some training or seminars or event short course in terms of improving the ability of the employees. Therefore the employees may still try to be a part of the company in order to enhance their own proficiency.
Conclusion
This section concludes the study by summarizing the results of the analysis. Based on the literature review, the case study analysis and the results obtained, the objective of the paper – to investigate the application of global human resources management issues in World Cuisine – was achieved.
During the growth and expansion of Multinational Companies into new markets (countries), as mentioned in the study, there are several human resource issues which affect the companies. The four main issues identified and discussed for World Cuisine include; global human resources movement, expatriate management, localization and global skill development.
First of all, as established, World Cuisine had several global human resource management issues. For example, the company was facing a serious challenge in identifying the right people that would effectively run the company through their assigned positions. The solution for this issue was using the human resource planning method to select effective employees with the best skills.
Secondly, expatriate management issues such as cases of cultural shock, problems dealing with different people and lifestyle were raised as other problems. However, as mentioned earlier, WC should identify the already willing and most qualified individuals to assume expatriate positions. Furthermore, making expatriates as mentors would encourage employee empowerment; hence, increase their morale and productivity.
Thirdly, localization issues that affected the company included factors such as skill shortage in the expansion markets. Hence, the company had to get local managers for key managerial positions.
Lastly, the issue of global skill development meant that WC had problems relating to retention of key employees within their main branches. As a solution, the company should provide a carrier management department for training, advising and encouraging employees in order to improve the employee retention rate.
By practising these techniques, WC should expand into new markets and still maintain a strong performance all through its operations. Since this study has identified and met the key objective, hope exists that the results shall provide an excellent guide for multinational companies that are expanding into new markets.
Reference list
Armstrong, M. (2001) A Handbook of Human Resource Management Practice, 8th edn, Kogan Page Limited, London, UK.
Armstrong, M. (2000) Strategic Human Resource Management A Guide to Action, 2nd edn, Kogan Page Limited, London, UK.
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