International Human Resource Management

Introduction

 

International Human Resource Management

 

CHAPTER 1: CHALLENGES OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT

The contemporary typology of human resource management practice is rapidly evolving and changing the environment. The changes are due to the fact that many international and legislative procedures are undergoing a silent revolution as a result of economic globalization. The impetus for economic globalization has reduced national autonomy and progressive nations are embracing multiculturalism instead of their traditional cultural and ethnic definitions. In addition, the process of economic globalization has produced systems of social and political dependencies among nations that were inconceivable a decade ago. The progression of international labour legislation under the auspices of the World Trade Organization (WTO) and the expanding frontiers of employee recruitment on a global platform has created unique approaches to recruitment.

There are many organizations that have found a residence in many nations globally and all their subsidiaries need to be managed and operated by qualified people who will optimize their resources.

Organizational Background

The organization under review is the Royal House Hotels and Resorts and it is an international hotel chain offering full services. It began in the United Kingdom and entered the International scene in 1992 and has now advanced to have 50 hotels throughout the United Kingdom and over 15 are in London. The organization has a large annual turnover and the revenue received last year was to tune of 170 million Euros. The organization boasts of 5500 employees and increasing as there are plans for expansion to adequately cover the regions of France and Germany. The organization has also recently acquired a chain of hotels in Berlin, Germany and plans are underway to rebrand the hotels.

However, according to the organizations policies, not all the acquired hotels are rebranded, others are sold at a profit so as to help in the redistribution of resources to other hotels in other places. The organization has not been actively involved in International business previously and has just joined the league of multinational companies recently. They are therefore still in the initial stages of exploration and they have selected Germany and France as their first nations to explore. For any organization that is profit oriented, staffing and the management of staff is a central factor and therefore International human resources management strategies come into play.

The Royal House Hotels and Resorts (RHHR) have therefore adopted an ethnocentric approach of managing their employees as the short term goals before incorporating either the polycentric or geocentric approaches. This means that they will, therefore, have managers from the home country that and the policies implemented in the UK are the very same policies that they shall use. The organization also seeks to replicate the corporate structure of the home country in the foreign country and this will help to increase the economy of scale as all the hotels whether in the motherland or the foreign land subscribe to the same principle of operation.

CHAPTER II: PRACTICAL AND THEORETICAL ISSUES RAISED BY THE CASE

In the face of the increasing rate of globalization, many multinational companies are facing a number of challenges in the management of human resources. With increased competition and more resources at stake, the levels of risk have significantly increased and no Multinational Company (MNC) can afford to operate ignorant of the issues that arise. The role of IHRM is becoming more and more strategic given the high global competitive operations.

In the past, the management of human resources in organizations used to be more centralized but in the wake of the globalization of companies, there has been the decentralization of the Human Resource department due to the presence of independent regional HR managers in the various nations  (Brewster et al. 1999). The Royal House Hotels and Resorts are faced with the challenge of ensuring the process of decentralization does not affect the staffing of the organization.

Besides the challenges posed by decentralization, the priorities of the HR department have also shifted to more global-oriented policies. Currently, the top priorities are the recruitment and the retention of high-quality employees from the labour market and also improving global leadership development. The Hotel Company is faced with the challenge of staffing and maintenance of the quality staff and also the development of global leadership. The recruitment may be based on the parent country nationals (PCNs), the host country nationals (HCNs) or the third country nationals (TCNs)

Another pertinent issue is the demand raised for the establishment of consistent HR practices amongst all the subsidiary organizations. The Hotel Company is thus faced with the challenge of maintaining the quality of services and spreading the cultures and core values to the subsidiary hotels in Germany and France. The fact that the foreign nations have their own cultures will demand that the HR department devise strategies to ensure that the foreign cultures do not supplant the organizations cultures.

The organization also faces the challenge of employee training and the skill enhancement amongst the employees. Consistent with the fact that there should be common values and cultures in all the subsidiaries and other branches of the hotel, the quality of the organizations products must also be maintained. Quality of the products can only be maintained when there is uniform training of the staff.

Another challenge that the organization may face is that of employee attrition. This is the loss of employees through resignation, retirement or firing. To hotel should, therefore, put in measures to ensure that there is always adequate staffing the organization both in the parent and the subsidiary organizations.

Every nation has a set of laws and regulations. This may either serve as a motivation to the efforts of a parent organization trying to establish a subsidiary in a foreign country (Jackson 2002). Taxation issues may pose a great setback to Royal House Hotels and Companies in Germany and France if not well studied so as to identify the legal loopholes that can be exploited.

How to deal with foreign currencies and their exchange is important in that the exchange rates could lead to capital gains or capital losses when it comes to the remuneration of staff in foreign countries either using the foreign currency or the national currency.

 

CHAPTER III: THEORETICAL APPROACHES TO RESOLVING HUMAN RESOURCE ISSUES

The theory forms the basis of decisions and reasoning in many practices. It is the function of theory to provide a basis for problem identification and problem definition. This is due to the fact that theories are advanced through critical evaluation of the existing challenges and the evaluation of possible remedies that can be implemented to solve the problems that had been identified. Theories may also be used as a basis of the evaluation of the organizations operations in the HR department so as to safeguard against the development of potentially destructive activities in the organization.

The challenge of management staffing and the policies to be adopted as the core values and culture of the organization can be solved through adopting a specific mindset which will be the mindset of the organization. There are three different mindsets also called states of mind that were developed by Perlmutter in1969. These mindsets are the ethnocentric mindset, the polycentric mindset and the geocentric mindset (Stone, Dianna 2008).

The ethnocentric mindset is base on the thought that the Parent country nationals (PCNs) are superior compared to any other nationals either in other headquarters or the other subsidiaries. This, therefore, follows that the PCNs are the ones that are considered for key positions in the management both in the subsidiaries and the headquarters. The theory also purports that; ethnocentric managers will be reluctant to sell off the ideas and the practices that give the organizations a unique brand to the other nations. According to Welch, an organization will go for ethnocentric staff based on either one of two main reasons.

The company will do so for lack of Host country nationals (HCNs) or intentionally in the initial stages so s to reduce the perceived risk of venturing into another nation for business. Other reasons that are proposed are that the parent country employees will carry the cultures of the host nation with them into the foreign country and they will maintain tight control over the foreign country subsidiaries. One of the major disadvantages of the above mindset is that there may be limited quality product due to the lack of more qualified employees from the host country and it may also lead to high HCN employee turnover due to the limited promotion opportunities.

The other form of mindset is the polycentric mindset which is the opposite of the ethnocentric mindset and it allows the HCNs are the best-suited managers to run the other headquarters and the foreign subsidiaries. This is mainly because the cultures of the foreign land may be hard to understand and to integrate with and therefore the parent organization will prefer to not impose their cultures upon the foreign nationals. This mindset allows foreign companies a great degree of autonomy as far as decision making is concerned. The managers of the parent country remain in the background provided the host country managers to deliver the required profits and results.

An advantage of the polycentric mindset is that the host country managers are taken through a process of training to instil some basic core principles of the organization in them. It also reduces some barriers such as language barrier and gives the host nationals a sense of association with the foreign organization ran by host nationals. This mindset also eliminates the problem of adjustment of the foreign nationals and the expenses incurred in the translocation of the PNCs to the host nation. It is also worth noting that unlike the ethnocentric mindset there is limited turnover due to the motivation and opportunity of promotion to the highest ranks of management of the subsidiary.

The third mindset is the geocentric mindset and is the most preferable for the organizations that are world-oriented (Winstanley et al 2000). This is especially because the nationality of the individuals taking up management positions is not determined by their nationality but by their qualifications and their ability to perform. The managers normally have international management experience previously and it aims to develop the best people so as to have a competitive advantage both in the home and in the foreign market.

This kind of mindset help n the development of a team of employees that have no national barrier and they operate as a pool of professionals with a collaborative approach that brings harmony between the parent company and the subsidiaries in host countries. Another advantage of this mindset which is not accorded by other mindsets is that it gives third country nationals an equal platform with the parent and host country nationals as far as managerial positions are concerned.

To solve the issue of staffing there are factors that need to be considered in the process of staffing. If the parent country is just after filling positions that have no people and would want to operate cautiously they will go with an ethnocentric mindset. On the other hand, if the organization weighs the opportunity cost of productivity for higher profits and the need to develop management and they decide to go with developing managers, then they are likely to adopt the polycentric mindset. Finally, when the organization is bent towards developing itself at large will adopt the geocentric approach and they will recruit staff oblivious of their nationality (London, Mone 1988).

The process of selection is not just a random process regardless of the mindset. It has a 5 step process of identifying the right people for the right kind of assignments. The first process is to create a selection team that will be involved in the process of recruitment. Secondly is to define the purpose of the recruitment by carefully assessing the context, reviewing the pool and establishing a criterion for the recruitment of staff. Thirdly, after special scrutiny, the potential candidates are identified and they are selected as the fourth process. Finally, an offer is made to the selected individuals to take up the position(s) that is offered to them and when turned down the process will have to be repeated from the third step (Vance et al. 2006).

CHAPTER IV: SOLUTIONS AND SUSTAINABILITY OF THE SUGGESTIONS

The challenges facing the organizations that are in the international scene such as the Royal House Hotels and Resorts can be solved and the solutions sustained in a number of ways. Firstly, the organization, in this case, the Royal House should identify the mindset that it desires to operate with by carefully scrutinizing the three mindsets and whether or not to operate purely in either one of them or have a mix of them. Identifying the mindset is important because it draws the line as to how far the parent company can be involved in the affairs of the subsidiary.

Communication is also vital for any organization and therefore it is pertinent that Royal House establishes and makes it known, whether or not the parent company shall have full control of the subsidiaries. Similarly, they should establish whether communication will be flowing purely from them or the subsidiary shall have some degree of autonomy.

To guard against labour issues arising in the international environment, it is advisable for the hotel company to subscribe to the International Labor Laws and also have favour with the labour unions in the various countries (Glinow, Mary 2002).

To optimize its resources the organization should take an approach that will make the most of the potency of the workforce that is diversified without having to restrain the cultures of others and maintaining a balance that produces synergy for the organization.

CHAPTER V: CONCLUSION

The current trend in the world with the levels of technological advancement is that the is becoming more and more of a global village where boundaries from one nation to another are becoming continuously insignificant and now companies and other organizations desiring to set base in the foreign countries can do so with so much ease. These are referred to as multinational companies (MNCs). Every single organization regardless of the degree of technology used in it will always require human staff/resources. These resources are managed by the human resource manager and in this case of multinational organizations, the International Human Resource Manager (IHRM).

The study above endeavours to create an awareness of the importance of considering staffing as far as internationalization of a business is concerned. Underestimation of this may lead to great losses and failure to launch into the foreign market well will destroy the image of the foreign subsidiary and may cost it time to recover.

However, correct entry into the foreign market is a function of the staff employed by the organization. It, therefore, follows that human resource is the most important resource in any given organization. Therefore, for the Royal House Hotels and Resorts to successfully set camp in France and Germany, the correct staffing will help to do away with challenges such as language and cultures and will help the organization extend its brand of products into the heart of Germany and France.

 

Bibliography

BREWSTER, CHRIS, AND HILARY HARRIS (1999). International HRM: contemporary issues in Europe. New York: Routledge, Print.

 

GLOW, MARY ANN YOUNG (2002). Best practices in IHRM: lessons learned from a ten-country. New York, NY: Wiley, Print.

 

JACKSON, T. H (2002). International HRM a cross-cultural approach. London: SAGE, Print.

 

LONDON, M., & MONE, E. M. (1988). Career growth and human resource strategies: the role of the human resource professional in employee development. New York: Quorum Books.

 

STONE, DIANNA L . (2008). Special issue: Critical issues in HRM theory and research. Amsterdam [u.a.: Elsevier, Print.

 

VANCE, CHARLES, AND YONGSUN PAIK (2006). Managing a global workforce challenges and opportunities in international human resource management. Armonk, N.Y.: M.E. Sharpe, Print.

 

WINSTANLEY, DIANA, AND JEAN WOODALL (2000). Ethical issues in contemporary human resource management. New York: St. Martin’s Press, Print.

 


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