HRM in an MNE

Human Resource Management involves a broad set of managerial activities focused on developing and maintaining a qualified workforce in ways that contribute to an effective organization. HRM is becoming more important every day and requires dedicated employees who can balance legal and ethical issues for organizations to be successful; which result from the importance of people as a source of competitive advantage. For a company to produce its goods and services in a productive manner, HRM accommodates employees with the right skills and training, and provide them with an environment in which they can make a powerful impact (Denisi/Griffin, 2012).
Compare and contrast two main differences between domestic and international HRM. One main difference between domestic and international HRM is that staff are transferred to different countries to work various roles within the international company’s foreign operations; these employees are called expatriates, who temporarily work and live in a foreign country. For a human resource department to operate in international HRM, they must participate in a variety of activities, such as international taxation, administrative services for expatriates, and services for language translation (Dowling/Festing/Engle, 2013). The second difference between domestic and international HRM, is that IHRM requires a greater involvement in the personal life of the employees. The HRM are responsible for making sure the expatriate understands all the benefits of the compensation package, including the cost of living, premiums, taxes, etc. In the domestic HRM, the involvement with an employee’s family is narrow and may not spread past providing employee and immediate family health benefits. Another example of proving assistance to a domestic employee may be providing transportation and assistance relocating from one facility to another (Dowling/Festing/Engle, 2013). There a few comparisons between domestic and international HRM, particularly in areas such as HR planning and staffing which is critical for the success of any company. Recruitment and selection because companies need the best of the best to create new ideas and to implement those ideas for the company. Appraisal and development include having the knowledge, skill, ability, and other characteristics to perform the job. Lastly, rewards used to motivate employees to gain applicant attraction, increase employee performance, and decrease employee retention (Dowling/Festing/Engle, 2013).
Examine two of the factors that drive standardization of HRM practices. Determine whether or not it is advantageous for an MNE to adopt a worldwide corporate culture for each of its subsidiaries. A factor that drives standardization of HRM is the pursuit of a multinational or transnational corporate strategy. Expatriates help MNCs compete by playing a key role in the knowledge transfer process, which involves gaining knowledge throughout the organization. The global strategy of organizations rely heavily on instruction from the home office, with one main strategy used for all operations globally (Denisi/Griffin, 2012). Another factor that drives standardization of HM practices is the support by a corresponding organizational structure, which determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management. A structure depends on the organization's objectives and strategy. Management has most of the decision making power and has tight control over departments and divisions. A company such as Proctor & Gamble that sells multiple products may organize their structure so that groups are divided according to each product and depending on geographical area as well. The intention of global standardization of HRM practices is to successfully achieve consistency, transparency, and an alignment of a geographically fragmented workforce around common principles and objectives. The use of common management practices is intended to create a feeling of equal treatment among managers involved in cross-border activities and also aims at a mutual understanding of what is expected from the employees. Furthermore, consistent systems facilitate the administration processes by increasing operational efficiencies (Dowling/Festing/Engle, 2013). The strength of corporate culture plays an important role in standardization as well as the ability to combine two cultures for the overall success of any achievement in HRM.
Examine the role of subsidiary. Compare and contrast global innovators, the integrated player, implementers, ad local innovators as subsidiaries. Determine the best role for a company that is just beginning to expand internationally. Provide a rationale for your response. The subsidiary role identifies the position of a particular division in relation to the rest of the organization and explains what is anticipated in terms of involvement to the efficiency of the whole MNE. Subsidiaries may be initiators as well as producers of critical competences and capabilities that contribute as specific profit centers to the competitive advantage of the whole multinational (Dowling/Festing/Engle, 2013). Global innovators contribute significant knowledge for other divisions and have gained importance as MNEs move towards the transitional model. An example of a global innovator is the 3M Company, which is a multinational corporation continuously producing more than 50,000 products including adhesives, abrasives, and laminates, etc. 3M has operations in more than 65 countries and product sales in nearly 200 countries. Post-it note and Scotch tape are among their leading products. An integrated player, just like a global innovator, also creates knowledge but is also the recipient of knowledge flows and very essential in the MNE network. Implementers rely heavily on knowledge from the parent or peer subsidiaries and create a relatively small amount of knowledge themselves, such as line managers. They have to think carefully about what they are planning in the context of the organization, and they have to perform effectively in the sense of delivering advice, guidance and services that will help the organization to achieve its strategic goals by making things happen and getting things done (Kuiper, 2011). Subsidiaries that engage in the creation of relevant country/region specific knowledge in all key functional areas because they have complete local responsibility is known as the local innovator role. As every subsidiary operates independently from the parent company and from other subsidiaries, this independence results in a number of localized HRM policies and practices (Dowling/Festing/Engle, 2013).
Analyze two of the factors that drive the localization of HRM practices for an MNE. Determine two advantages of the localization of HRM practices. Localization includes the full range of HRM practices and policies, from recruiting and selection through training development, rewards, and structures for participation and influence.
Two of the factors that drive the localization of HRM practices for an MNE include cultural environment and institutional environment. The culture of an organization mainly affects how it formulates and implements its human resource strategy. The set of values that helps its members understand what the organization stands for, how it does things, and what it considers important are the foundation of the organization’s culture (Denisi/Griffin, 2012). According to Harry C. Triandis (2013), he found that cultures where work is based on more integrated personal social ‘relationships’ may value a more complete balance of intrinsic and extrinsic rewards, while cultures characterized by personal interdependence and isolation ‘individualism’ as well as rapidly changing personal and social contexts may emphasize extrinsic rewards- given the rewards. The institutional environment is another factor that outlines the behavior and expectations of employees in subsidiaries. Institutional environments are characterized by the elaboration of rules and requirements to which individual organizations must adapt to in order to receive validity and support. Development that can be identified by the theoretical lens of institutionalism can be defined through three effects. The country of origin effect indicates that multinationals are formed by institutions existing in their country of origin and that they attempt to introduce these parent-country-based HRM practices in their foreign subsidiaries. The host effect refers to the extent to which HRM practices in subsidiaries are impacted by the host country context. Lastly, the home country effects are described by MNEs that try to transfer HRM activities created by their home country headquarters environment to foreign locations (Dowling/Festing/Engle, 2013). Some advantages of the localization consists of HRM are able to teach the new employees about the culture of the organization through orientation, training sessions, organizational activities, and passing on knowledge of corporate history.

Determine the impact of the culture and institutional context (environment) on:

(Yang, 2012)

References

Denisi/ Griffin (2012). HR, 1st Edition. Mason. Ohio: Cengage Learning
Dowling, P., Festing, M., Engle, A. (2013) International human resource management, 6th edition. Mason, Ohio: Cengage Learning
Kuiper, E (2011). Performance managers as hrm implementers. Enschende, Netherlands.
Retrieved from: http://ww..utwente.nl/61490/1/MSc_E_Kuiper.pdf
Yang, Nini (2012). HRM in the host context country. San Fransico State University. Retrieved from: http://userwww.sfsu.edu/nyang/IBUS%20618/Chapter%209-NYPPT.ppt