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International Human Resource Management

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Introduction to International Human Resource Management

International human resource management is the set of activities which intends to manage human resources of an organization at an international level for achieving objectives of organization and competitive advantages over rivals on national as well as international level. Apart from human resource management functions such as recruitment, selection, performance management etc. there are some additive activities in IHRM which includes global skills management, managing expatriates and many more. The present reports is going to cover main aspects of Western model of HRM and its principles. It will also throw light on different national cultural traditions in HRM.

WESTERN OR AMERICAN MODEL OF HRM

Definition

Western model of HRM emphasises on independence and flexible working practices which is very formalised having a strong sense of management.

Key features and principles

The concept of HRM was firstly propounded in United States of America since 1960 and 1970. after that it has been used by all the nations around the globe with its theoretical and practical features.

The main features and principles of Westerns model of International human resource management are describe below:

  1. Western nations follow flat structures and leadership style which is followed is mostly democratic style. Western countries also differ from other countries in terms of motivation programs. They focus on individual rewards, compensation packages and personal career development.
  2. The human resource professionals in Western nations adopt different means of communication i.e. oral and direct communication is preferred.
  3. Taking use of emails, networking forums and other types of management forums are highly practised in Western nations like United Kingdom and United States
  4. Resolution of conflicts and dispute is one of the key aspect of human resource management which is practised more in Western nations than other parts of the world.
  5. Westerners resolves conflicts through avoiding or neglecting conflicts.
  6. The employers in Western nations prefer more for personalised interviews. Personalised process for selection is adopted by majority of organizations in these nations along with evaluating capability and technical prerequisites of individual for the job. Then they assess the work experience of potential employees in a similar job.
  7. The procedure of selection in these countries does not includes judging a candidate familiarity with domestic culture.
  8. The Western nations give more time for training and development of employees.
  9. These countries focus on “pay for performance” which has a very moderate role.
  10. The approach towards performance management and appraisal system is oriented towards outcomes. It promotes increased productivity of employees and it is more focused towards performance appraisal rather than individual appraisal. For instance, In organizations of United States of America, employers prefer to rank pay considering it one of the best methods of performance appraisals. They think that it is the most significant way of documenting performance of employees.
  11. The practices of compensation in Westerns countries such as United States of America in a very dominant systems which is referred as balance sheet approach. With this practice the employers provides several incentives such as mobility premium, hardship allowances etc. But this approach does not provides enough security to the employees.
  12. In terms of cross-cultural diversity Western nations such as America gives importance to punctuality and holds a belief that time is equivalent to money. The culture in these nations encourages risk taking. The decision-making in the organizations are made very speedily and people working there is usually very ambitious and future directed. Persistence is one of the noticeable features in most of citizens in countries like America.
  13. Furthermore, there is presence of individuality and high sovietism along with a inclination towards group orientation. Communication is done in a cordial and healthy environment in which there are small or very few arguments on the basis of formative criticism.

RELEVANCE IN OTHER COUNTRIES

Different national cultural traditions regarding HRM

There are different cultural traditions in people management in different countries. If we take Eastern and Western nations they have a very different culture and traditions which affects their HRM practices and policies. National traditions and cultural impacts numerous aspects of an organization's HR practices which consists of performance management and appraisal system, strategic decision-making, leadership, managing employee relations and so on. Culture of a country is comprising of assumptions, norms, beliefs and values which makes a key component in the society. Because human and institutional foundations are the result of cultural roots of a country, is makes a significant influence on business operations especially in terms of the soft aspects like HRM policies. Traditions and culture of widely impacts each thought, decision-making process, actions and organizations. Most of the human resource management theories and practice are originally from Western nations.

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However, due to increased globalization and cross-cultural interaction showcases the variance in cultures and therefore it is clearly visible that Westerns and other parts of the world prefer different human resource approaches, perspectives, norms and practices. If human resources practices in Eastern nations such as China and Japan are compared with Western nations such as United States and United Kingdom it depicts that they are very different when organizational structure, motivation, communication and dispute settlement are concerned. The organizational structure, style of leadership and human resource management philosophies are very different in these parts of the world. In China and Japan, there are strict rules to adopt organizational hierarchy and the leaders in business enterprises follow autocratic style of leadership. On the other hand, nations such as United States and United Kingdom follow flat structures and leadership style which is followed is mostly democratic style. Western countries also differ from other countries in terms of motivation programs. They focus on individual rewards, compensation packages and personal career development, other nations such as China and Japan, emphasize on collective reward system and slow progress.

The human resource professionals in Western nations adopt different means of communication then other countries. In nations like China and Japan, communication is often contextual and indirect as they require to save their faces, whereas in Western nations oral and direct communication is preferred. Taking use of emails, networking forums and other types of management forums are highly practised in Western nations like United Kingdom and United States as compared to China and Japan in which they give very high importance to personalized relationships. Resolution of conflicts and dispute is one of the key aspect of human resource management which is practised more in Western nations than other parts of the world. For instance, in nations such as China and Japan there is a tendency for harmonious and holistic approaches towards conflict resolution. This shows that their culture is affecting their HRM procedures and policies. They prefer to solve disputes by accommodation and making compromises. But Westerners resolves disputes either by avoiding or neglecting them.

Examples from case study of China

Different types of cultures can be experienced through movies, soaps and documentaries due to the increased use of information technology and globalized media. Along with this, as more knowledge has been gained about different cultures, the growing globalization of market, competition and organizations has resulted several people to believe that cultures are joining. The idea of culture is profoundly rooted in past times and the scope is extending far above the boundaries of activities in an organization. Organization are the outcomes of society and times in which they are present. Taking the example of China, the cultural values of Chinese organization is based on the concept of Confucianism. This can be also termed as Confucian work dynamism. In nations which adopts this type of cultural values, they are long term oriented and are focused towards future. They place a great value and importance to saving and persistence. Also the cultural values of China is very holistic which is also described in above sections. The major cultural values which dominates in China is giving importance to seniority and human factors. This has been seen that Chines cultural values are more sophisticated because they are interrelated and are embedded in the culture of collectivism. The deeply rooted cultural values cannot be easily taken away or washed out by culture of organization and global HR practices and policies. Chinese organization takes into account their own cultural values when they execute global HR policies and practices.

CHALLENGES FOR MNC'S AND IMPLICATIONS FOR IHRM

Definition of MNC and IHRM

A MNC is having facilities and other possession in at-least one nation other than its home nation. These corporations have their offices and manufacturing plants in various nations and generally they have a centralised headquarter from which they coordinates global management. They are also known as multinational enterprise (MBE) or transnational corporation (TNC). There are many different model of MNC which includes Centralised, Regional and Multinational. The human resources professionals in an MNC which has several divisions or subsidiary units in foreign nations have to meet all the basic HR responsibilities along with additional tasks which are particularly for their own department.

Difficulties in different cultural traditions of HRM between home and host nations

Due to the changes in global economic reforms and introduction of globalization, international business is the top priority for every business firm for becoming a Multinational corporation to have competitive benefits of the entire global market. However, with the advantages firm have to face some major difficulties and problems also for managing business in other nations. One of the main difficulty is environmental factors and out of this cultural differences is also a key problems which is faced by MNC's in the host nation. The difficulty of cultural diversity in international business is the contemporary scenario which is continuously growing along with increasing globalization. To manage differences in traditions, religions, culture and languages in the host nation is very tough and complicated task than home nation in a Multinational company. The cultural diversity in people management and customers is not just linked with the society but it also affects psychology and personality of stakeholders of a MNC. To make an organizational culture which is aligned with the culture of host nation is very hard job for any MNC due to the fact that culture of an organization is very different from the societal culture of host nation. The challenge of cross-cultural diversity obviously increases because when a firm enter into a new market, it has to manage different culture who may have different responses to the HRM policies and procedures.

For instance, in an Multinational company who hire employees from America and India. The American employees are more likely to grab opportunities for their own personal development and compensation, on the other hand Indian employees will be concerned about progress and prestige of firm and will be more loyal towards company. One of the main problem in managing different culture and traditions is communication. For instance, Latin American, Asian culture mostly interacts with use of facial expression and voice tone with words, on the contrary, Germanic and English speaking culture places value to emotions and feelings, whereas in countries such as USA and Italy they follow a stronger displaying of emotions in business. One more difficulty is workplace etiquettes. To address in a formal manner is a big thing when dealing are done with peers and partners who belong to other nations. Some of them prefer title and surnames and some like taking only their first names. Asian countries like Singapore, South Korea and China like using formal Mr. or Ms. With Surnames, on the other side, nations such as America and Canada like to take use of first names in their formal business meetings and dealings.

MNC also faces challenges in regard to operate its business in different markets and thus varies within nations and thus faces issues in regard to operate HRM practices in business. MNC operating in western countries also faces challenges regarding recruiting and retaining managerial talent in order to maintain skills and thus operate business in such environment and thus persuade skilled professionals to work in an effective way and thus enhance the business functions. Implementing IHRM strategy also result into facing serious challenges and thus implement the operations of firm in developed countries and thus helps in improving firm's operations in market. HRM practices within business in western countries considers that changes in the patterns of global staffing so that recruiting skilled workers helps in enhancing business operations in worldwide market.

How to manage these differences

When the managers and staff of a Multinational company slowly knows the aspects and differences between different culture and traditions of several nations, it is their duty that they should implement strategies which remove these differences.

Some of the strategies which should be adopted by multinational corporations to manages these cross-cultural differences are stated below:

Good knowledge of foreign culture

The first and foremost strategy is that the company should acknowledge and admit that there is an existences of difference in the cultures. These differences can be in terms of perceptions, evaluations, social conditions, interpretations etc. So these differences are to be given some names, description, explanation and understanding. To recognise the culture of the partner nation is the first condition for having a mutual understanding and better cooperation. However, this steps is not very easy and common.

Respecting foreign culture

The managers and employees of a multinational corporation should give due respect to cultural values and traditions of foreign nation. This means that they should agree with the differences without being judgemental. One should not claim that their own culture is the most perfect one or better as compared or other nation's culture. They should accept the fact that every culture is different.

Helpful steps in relationship with a foreign culture

Another way is to putting some sincere efforts to find out a common solution, mutual understanding and simplifying the complex and demanding procedures of behaviours in varied cultural environment. This does not mean that participating nations should forget their culture and traditions, but it is recommending that they should take use of their own cultural values to attain more understanding and knowledge about other nation's culture which is not a tough job. It is sufficient enough to sacrifice anything which is not valuable for us, but it is very precious for some other culture. The key condition in this strategy is that one should have good knowledge of partner firms and its cultural and traditional values.

Ignoring cultural differences

Under this method, there is phase in which managers try to avoid the differences. After some time it is immaterial for managers and staff as they have developed a better understanding about each other's cultural values and traditions. When the cultural differences are ignored is a multinational organisation it leads to effective management of these differences and reduces the chances of negative implications and grows positive affects of diverse culture.

Managing differences

This type of approach is generally used by synergistic organisations. These firms realise influences of of cultural differences which results into benefits as well as disadvantages. The management of these organisations has a viewpoint that “ our ways and their ways of believing and management is different, but nobody is superior to the other”. They try to minimise potential problems through management of affects of cultural differences rather than minimising difference themselves. In the same manner, managers maximise potential benefits through management of influences of cultural differences instead of avoiding them. The enterprises that takes use of this method provides training to their managers and staff for recognising cultural differences and take their use for creating benefits for organisations.

Unified culture

MNC's should also create a balance between giving respect to all cultures along with assuring employees of all offices are allied towards a common goal. For this organisations can creates a community culture in all its offices. The blog of corporation or a daily e-mail can throw light on achievements and then give the new to all offices. Online collaboration tools or social media teams can also connect the entire staff who have diverse culture and traditions with a single mission. When the whole organisation and its employees will move towards a unified culture it will also reduce chances of conflicts and disputed which takes birth due to the cultural differences.

Examples using case study of Anakew

As per the case study of Anakew, Nigeria has been adopting a combination of Western practices of HRM which influences the nation's particular factors. This is named as cross-vergence perspectives which is prevailing in explaining human resource management practices in Nigeria. This country is said to be as collectivist which is consistent with the principle of old system of organisations under which responsibilities of group members are taken from activities of group instead of particular jobs. Also teamwork is focused. The recruitment and selection process of Nigerian organisations are a set of universal or standardised practices and local practices. For example, standardised sources of recruiting are taken in use which consists of screening, interviews, short-listing and tests. But it also takes into account the localised practices in which advertising and community referral are take in use.

CONCLUSION

The present study is made to highlight the Westernised model of HRM which states along with some key characteristics such as performance management approach, training and development in Western countries. It has been assessed that there are varied national cultural traditions in Eastern countries such as China and Japan when compared with Western nations such as UK and America. Furthermore, it has been analysed that there are many cross-cultural differences which poses several challenges for Multinational corporations such as communication and formal etiquettes. Some effective strategies are being identified in the report for managing these differences such as ignoring them or respecting other's culture. It is recommended that multinational corporations should try to minimise these cultural differences by either choosing homogeneous human resource or try to socialise the whole staff into behavioural patterns of dominating culture.

REFERENCES

  • Afiouni, F., Ruël, H. and Schuler, R., 2014. HRM in the Middle East: toward a greater understanding.
  • Altman, Y. and Baruch, Y., 2012. Global self-initiated corporate expatriate careers: a new era in international assignments?.
  • Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.
  • Barak, M.E.M., 2016. Managing diversity: Toward a globally inclusive workplace. Sage Publications.
  • Baruch and et. al., 2013. Exploring international work: Types and dimensions of global careers. The International Journal of Human Resource Management.
  • Burgess, J., Connell, J. and Winterton, J., 2013. Vulnerable workers, precarious work and the role of trade unions and HRM.
  • Caligiuri, P., 2014. Many moving parts: Factors influencing the effectiveness of HRM practices designed to improve knowledge transfer within MNCs. Journal of International Business Studies
  • Cavusgil and et. al., 2014. International business. Pearson Australia.
  • Collings, D., Wood, G.T. and Caligiuri, P.M., 2014. The Routledge companion to international human resource management. Routledge.
  • Croucher and et. al., 2012. Employee turnover, HRM and institutional contexts. Economic and Industrial Democracy.
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