Human Resource Management Issues

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Table of Contents

Types of Human Resource Management Issues in International Business
Types of Staffing Policy Approaches in International HRM
Evaluation of the Expatriate Management Policy in HRM (UAE Case)
Reference List

Types of Human Resource Management Issues in International Business

International human resource management is defined as the effective process of procuring, allocating and utilizing human resources in multinational corporations. The issues that are considered to affect human resource management in foreign establishments are as discussed below.

Culture

“Culture is defined as a set of assumptions, rules, and values about social interaction” (Hofstede, 2003). “HRM personnel should develop culture sensitive policies that are acceptable within the local culture.” (Sims, & Schraeder, 2004). According to Hofstede (2003) the following are factors that differ in national cultures and should be considered in defining management practices.

Power Distance –Organizations in high power distance develop centralized and bureaucratic structures while those in low power distance are decentralized with more organic structures.
Uncertainty Avoidance –In high uncertainty avoidance countries, people tend to rely on experts and ensure greater stability while those in low uncertainty avoidance areas take risks more lightly.
Individualism-Collectivism – Individualism implies that everyone should be independent while collectivism holds that everyone should needs the other.
Masculinity-Femininity – “Masculine societies emphasize the need to achieve something tangible while Feminine societies value helping others, having better quality living, and increased relationships with others” (Sims, & Schraeder, 2004).

Economic Factors

HRM practices are usually determined by the economic systems in different countries. “In free enterprise systems, the need for efficiency favors HRM policies that value productivity; while in socialists systems, policies tend to prevent unemployment regardless of the efficiency.” (“Global Human Resource Management,” n.d).

Political Regulations and Policies

Different countries have differences in industrial relations such as the governing relationship between the employer, employee, and unions. Employees of some nations are usually given legal rights to take part in formulation of company policies while others do not enjoy such rights. When expanding to a particular country, their governing policies may impact the rate at which a company can develop within the region.

Educational, Managerial, and Technological Development in Host Country

There are several challenges produced by different countries in relation to the need for expansion by multicultural companies. For example, a multicultural company with an aim of expanding its operations in Europe will be faced by different issues and challenges as compared to one with intentions of expanding its operations in China. The available workforce in China may be less educated as compared to their European counterparts, thus, fetch lesser compensation.

Firm’s International Experience

Firms with longer periods of service in the international markets acquire better skills in maintaining a competitive edge. As compared to global players, new entrants in the international business lack the experience and knowledge of the market and may think of it as uncertain and unpredictable.

Types of Staffing Policy Approaches in International HRM

International Staffing Policy is a factor that has great impact on companies operating in the international arena. Generally, international staffing has greater challenges as compared to domestic staffing. Therefore, different approaches have been identified and are used by International human resource management.

The three main staffing approaches that are used for staffing in International HRM include; ethnocentric staffing, polycentric staffing, and geocentric staffing (“Global Human Resource Management,” n.d).

In an ethnocentric approach, firms tend to employ people from the parent-country nationals (PCN) to take key managerial positions. The advantages associated with this approach include; the nationals’ familiarity with company goals, policies, procedures, products and technology.

However, the disadvantages of this approach include; poor expatriate adaptation, lack of expatriates effectiveness, and underdevelopment of local managers. This approach is normally used in the early stages of internationalization and in a centralized approach to globalization.

In a polycentric staffing approach, host-country managers (HCN/local managers) are usually given key positions in their own country of residence. This is usually the scenario due to the belief that local managers understand host country market in relation to culture and behavior, thus, deemed to be more suitable for key positions.

The advantages of this approach are the lower cost of hiring local managers, who may also be in better positions to advise on sensitive political issues. However, the disadvantages with this approach include; locals conflicting loyalty, difficulties in coordination with the headquarters, and lack of valuable experience by headquarter managers (“Global Human Resource Management,” n.d).

Lastly, in the geocentric approach, firms tend to employ managers from any other country other than the host country to take key managerial positions. These natives from other countries are referred to as third country nationals (TCN).

In this approach, there is an assumption that the best candidate to recruit in a firm can be found anywhere on the globe (“Global Human Resource Management,” n.d). The benefits of using third country nationals include; availability of broad experience, multilingualism, and an international outlook. In the international arena, multinational companies have been identified to increasingly recruit third country and host-country nationals to fill positions in their international subsidiaries.

Evaluation of the Expatriate Management Policy in HRM (UAE Case)

Generally, expatriates in the UAE have been governed by tough HRM management policies. Most of the expatriates living in the region had to undergo various tight checks before being accepted in the country. Recently, however, some of these governing policies have either been removed or reduced to a certain level. Below are areas which have been under check by the policies.

Expatriate Entry Requirements

The UAE Ministry of Health is working on a law in cooperation with the ministry of labor to ensure that expatriates are disease free before entering the country (UAE mulls new HIV/AIDS test policy, 2007). This is in accordance with the introduction of a new policy by UAE requiring that all expatriates seeking jobs in the region are HIV/AIDS free.

Citizenship

Initially, expatriates in the UAE could not enjoy citizenship rights regardless of the number of years they lived there. This also applied to their UAE-born children because they were not considered as citizens either. However, this has changed in states like Dubai where expatriates living for more than 20 years will be issued with a UAE passport.

The expatriates will then be issued with a document that will enable them to be treated like nationals. However, UAE residency law does not offer permanent residency, but on renewable basis (Now expats in Dubai can get UAE passport, 2005).

End-of-service gratitude policy

In accordance to the UAE law, it is a requirement that all employers pay their employees an end-of service gratuity which is similar to pension (UAE consider changes, 2010). Currently, reports show that UAE officials are pushing for organization to be paying expatriates an end-of service gratuity.

This is intended to make funds available to companies in case of sudden financial constraints. In the current UAE pay skim, expatriates earn 21 days’ pay for the first 5 years of employment and 30 days’ pay for the remaining years (UAE consider changes, 2010).

Reference List

Global Human Resource Management. (n.d). Web.

Hofstede, G. (2003). Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations across Nations. New York: Sage Publications.

Now expats in Dubai can get UAE passport. (2005, July 25). Web.

Sims, R. H., & Schraeder M. (2004) An Examination of Salient Factors Affecting Expatriate Culture Shock. (2004). Web.

UAE consider changes to end-of-service gratuity policy for expatriates. (2010, December 14). Web.

UAE mulls new HIV/AIDS test policy for expatriate job seekers. (2007, August 1). Web.

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