Introduction
Human resource management plays a significant role in managing large and small organizations. For the large organizations that operate in different countries, there is a transfer of policies and practices of Human Resource Management. Every country has different cultures, standards, and policies for running its organizations. It is, therefore, necessary to be keen on such factors when transferring human resource policies. We will analyse the role of HRM in international organizations and the impacts on culture. Competition is increasing across input all industries, which has made organizations merge by finding subsidiaries in developing areas for cost-effectiveness. Many companies face challenges in transferring HR practices and policies from the primary organization to the subsidiary.
These multinational organizations use different strategies to transfer the HRM practices and policies depending on the host’s environment. MNC encounter challenges when transferring HR policies and standards in places with different cultural backgrounds. The human element is critical in the management of resources effectively and in achieving success. Some of the factors to be considered in people include; values, personality, age, and the size of the subsidiary (Harzing, 2010).
Human resource management in US and Japan
HRM entails everything related to the management of personnel in irradiation. HRM is not only associated with a high-commitment method of workforce management but also any specific ideology or model of management. US and Japan have both similar and different policies and practices of HRM. HRM has been on top of management research for the past two decades. It is necessary to research to make policies and practices applicable to countries of different cultures (Mathis et al.,2016).
There are two dimensions to human resource management, which are hard and soft. The hard dimension concerns the usage of resources 8n terms of quantity, while the soft method focuses on leadership and motivation. According to the Chartered Institute of Personnel Development, HRM professionals have to define and communicate the relationship between organizational success and the people (Debroux, 2017). The HRM is tasked with collaborating with people of different cultures, values, and demographics. Same HRM policies and practices cannot be used across different cultures for the organization’s success.
HRM comes up with strategic management with the concept of flexibility and fits to work across different countries. Flexibility comes with the opportunity to adapt to environmental changes and opportunities, while the fit is about HR policies and practices compatible with the organization. For competitive advantage, multinational organizations are looking to venture into new countries. Firms have been making foreign investments at an annual rate of 95% for the last three decades.
For an organization looking to transfer HR policies between US and Japan, there are three approaches: employing nationals of the host country, which is called ethnocentric; employing nationals of the parent country, referred to as polycentric, or employing third-country nationals, which is called geocentric approach. Three factors affect the process of transferring human resource policies and practices. They include; the culture of the home country, the culture of the host country and the position of a subsidiary, and the dependency of the parent company on the subsidiary to fulfil what is it is required (Debroux,2017). Human resource management should be in a way that fits the internal and external environment of the organization and adapt to the changing business environment.
International Human Resource Management (IHRM)
International Human Resource Management is significant for international market success. It makes the difference between failure and success. IMRM is the management of human resources across different countries, which is challenging compared to local HRM (Brewster et al.,2016). Human capital offers firms a chance to compete internationally and can be defined with the help of three theories; human capital theory, transaction cost economy theory, and the resource-based view of the firm theory.
IHRM entails similar activities as domestic HRM, including human resource planning, recruitment, staffing, and motivation through incentives and proper wages. The global model of HR depicts five organizational drivers for IHRM:
- Efficient orientation
- Exchange of information
- Primary business processes
- Providing global service, and localization of decision-making
It exerts pressure on HR professionals, which forces multinational companies to design enablers of high performance like central HR philosophy based on an international theme, HR affordability, and excellence of HR via knowledge transferability (Brewster et al.,2016). Different HR practices, like global leadership and talent management, are necessary to enable and deliver competencies.
Mergers and Acquisitions
One of the major ways firms are penetrating the global market is through Cross-border mergers and acquisitions. However, mergers and acquisitions can fail due to ignorance of IHRM. Mergers and acquisitions across different countries are of specific concern for those interested in IHRM. Different challenges develop with the process of a merger, such as management of the workforce, communication, salary and incentive policies, and the employment cost of restructuring.
Expatriates
Expatriates play a significant role in transferring knowledge to different transnational firms. Effective management of employees is essential for the success of international organizations. Large firms send expatriates to different countries to enhance the management of the company’s resources. Having the right personnel at the right time and place is key for globalization (Mathis et al.,2016). It is important to employ people from the host country as they understand their culture and domestic market conditions better. Globalization has shown its effects on global management, which has made changes to the world economy.
Transfer of HR Policies and Practices
From an international perspective, the transfer of knowledge and HR operations is part of multinational companies. Global companies utilize four types of strategies to transfer HR policies and practices. The ethnocentric strategy uses similar human resource practices and policies in the host and the parent organization (Harzing, 2010). Polycentric strategy is used to employ a local workforce in managerial positions and implementation of practices of the host country in the subsidiary. Regiocentric strategy divides the operation of a company and the transfer of the staff to different geographical areas.
Last but not least is the Geocentric strategy used to employ a workforce that does not limit itself to nationality but looks for whoever is suitable for the job. According to research, HRM practices and industrial relations of local firms and foreign MNCs are military. However, most recent research shows that multinational companies owned by the US have different HRM practices from local firms in Japan. HRM practices have played a significant role in Ireland as a medium for Grange for local firms.
Role of the Human Resource Management across different cultures
Human resource management is the backbone of the organization’s management as it manages the organization’s resources via humans in an effective way to obtain organizational goals (Stone,2020). HRM recruits the workforce and is in charge of their concerns concerning the organization’s operations. In addition, HRM plays a significant role in the workforce’s motivation. The organization’s strategy should be well defined and communicated to the employees so that they work towards achieving a common goal.
An organization’s business approach is connected with the strategy and control of human resources. The human factor is very significant in achieving the objectives of an organization. HRM practices and policies are similar across all organizations; however, the difference comes when a different country or different culture is involved. HRM should be flexible to adapt to the changing environment. Globalization is creating new trends, and businesses are taking new directions toward managing their human resources to gain a competitive advantage (Stone,2020). Managing human resources at an international level is challenging compared to the national level.
Recommendations
- Transferring human resource practices and policies is a challenging task requiring a proper approach and strategies. I, therefore, recommend the following to organizations looking to invest in the global market;
- There is a need for Human Resource Management to
- study across different cultures due to the new market conditions, cultures, and different competitive environments.
- The management should be familiar with the host country’s policies and create good relations with the policymakers.
- HRM should also consider other nationalize as they play a critical role in the success of an organization. HRM should not be limited to only two cultures but also focus on other cultures for inclusive purposes.
- The HRM should work with a strategy that is easily flexible, which means an approach can be customized depending on the existing market conditions and fit the organization appropriately.
Conclusion
The globalization of business has greatly created a revolution in the HRM sector. US-based companies have used mergers and acquisitions to penetrate the Japanese market. However, Japan has different cultures, values, and standards that the organization must uphold. The local community should be considered as their attitude towards the organization will significantly impact the ability to transfer and implement HR practices and policies (Pucik, 2017). The IHRM has determined the significance of culture. The national culture, values, and standards must be considered when penetrating the global market. HRM is connected with the output of the organization and the concerns of the workforce. I recommend the divergence technique when trying to adapt to differentiation in transferring HR practices and policies.
References
Brewster, C., Houldsworth, E., Sparrow, P., & Vernon, G. (2016). International human resource management. Kogan Page Publishers.
Debroux, P. (2017). Human Resource Management in Japan: Changes and Uncertainties: a New Human Resource Management System Fitting to the Global Economy. Routledge. https://www.taylorfrancis.com/books/mono/10.4324/9781315197364/human-resource-management-japan-changes-uncertainties-philippe-debroux
Harzing, A. W., & Pinnington, A. (Eds.). (2010). International human resource management. Sage. https://books.google.com/books?hl=en&lr=&id=Cf9cBAAAQBAJ&oi=fnd&pg=PP1&dq=ihrm+human+resource+management&ots=7hsVimcDIu&sig=ge72juN7EqvHNq34uLWu5aoeURA
Mathis, R. L., Jackson, J. H., Valentine, S. R., & Meglich, P. (2016). Human resource management. Cengage Learning.
https://books.google.com/books?hl=en&lr=&id=-ihBCgAAQBAJ&oi=fnd&pg=PR3&dq=human+resource+management&ots=nlc0_MZRXg&sig=GDVHKggxBdtm2k4tLlQ-5wMKXIw
Pucik, V., Evans, P., & Björkman, I. (2017). The global challenge: International human resource management. https://research.aalto.fi/en/publications/the-global-challenge-international-human-resource-management
Stone, R. J., Cox, A., & Gavin, M. (2020). Human resource management. John Wiley & Sons. https://books.google.com/books?hl=en&lr=&id=uCIgEAAAQBAJ&oi=fnd&pg=PR13&dq=Human+Resource+policies+in+United+States+&ots=PJJRVwZKD2&sig=FYlpFw78qoc1vatGY50twOYQt5M
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