Introduction
The global marketplace presents numerous challenges to organizations, especially in managing human resources. The cultural differences between different nations can significantly impact international human resource management (IHRM), both positively and negatively. Hofstede’s cultural dimensions theory has highlighted the importance of understanding and adapting to cultural differences to effectively manage a multinational workforce (Ererdi et al., 2022). This essay analyses some key factors that impact IHRM practices and the challenges organizations face when managing their human resources globally.
Cultural differences can significantly impact international human resource management (IHRM), both positively and negatively. Hofstede’s theory of cultural dimension has emphasized this impact. An organization operating in a foreign country must understand and adapt to these cultural differences to effectively manage its workforce (Aaijaz & Venkatachari, 2023). Aljadir et al. (2022) also argue that cultural differences can impact people’s communication and management styles in international companies. In high power distance cultures, organizations have to establish strong hierarchies, and employees are expected to respect authority. In such a culture, IHRM practices may need to consider that employees may be more deferential to their superiors and may not be as comfortable expressing their opinions or challenging decisions. This cultural impact is illustrated in the case study of Techinfo implementing strict hierarchies in its India operations due to its high-power distance and collectivist culture in India is reflected in strict hierarchies that are generally impermeable. This approach is more effective since it aligns with local culture and is likely to result in effective management and satisfied employees, consequently enhancing employee performance (Dickmann, 2021). However, cultural differences can lead to a clash of values and approaches, negatively impacting the employees and the organization’s performance. For example, from the case study, most Indians of Techno info prefer working in the US and Europe instead of China due to the difficulty in adjusting to China’s culture due to cultural differences.
Secondly, legal factors ensure that IHRM policies align with the host country’s legal framework. Adherence to local laws also fosters a positive image of the organization as a responsible corporate citizen, which is beneficial in the long run. These factors promote a healthy and inclusive work environment. Furthermore, legal factors ensure that employees’ rights are protected, which creates a sense of security and trust in the organization, leading to higher employee satisfaction and retention rates. For example, in the case study, Indian regulations help protect employees by requiring employers like Techinfo to offer positive working conditions and guarantee job security, which is good for the workforce. However, regulations hinder IHRM practices by imposing restrictions. Host country laws may fail to consider employee well-being resulting in exploitation and poor condition. For example, US regulations do not set wage requirements or require unions, which can negatively impact the compensation of Techinfo employees who have to expect lower pay due to its focus on pay. This can result in increased recruitment costs and time delays.
Third, organizational cultures are vital in the execution of IHRM policies. Organizational culture affects how employees interact with one another, how they perceive the organization, and how they behave in the workplace (Hosanoo et al., 2021). It refers to the shared values, beliefs, assumptions, and practices that shape the behavior of employees within an organization. Depending on the international context and focus of the organization, these values change and impact the direction and HR practices implemented. For example, from the case study, Techinfo first implemented an organizational culture that prioritised a positive employee experience, creating an environment where employees view each other as family and treat others as such. This resulted in very high employee satisfaction. Moreover, organizational culture can also impact the attraction and retention of employees in a foreign subsidiary. A positive and supportive culture can attract high-performing employees and reduce turnover rates (Hosanoo et al., 2021). The cases study highlights that people in India wanted to work at Techinfo since it cares for its workforce and has a positive culture. Also, recruitment managers only employ individuals that align with this culture. However, a negative organizational culture can lead to adverse outcomes in IHRM. For example, if the organizational culture is not aligned with the local culture, it can create a clash of values and negatively impact employee morale and productivity. For example, Techinfo employees find the new organisational culture unfavorable after the takeover since it only prioritises profits over their well-being. While such a culture is very effective, the US applying it to India would be very ineffective, decreasing morale and resulting in high turnover. As Agarwal notes, such as culture will increase stress and frustration among employees after the takeover.
In addition, leadership is crucial in shaping the success of international human resource management (IHRM) practices in organizations. Positive leadership practices can improve performance, increase job satisfaction, and increase employee motivation. On the other hand, negative leadership practices can lead to decreased morale, high turnover rates, and, ultimately, lower performance. Transformational leadership, which involves inspiring and motivating employees, is effective in IHRM. This leadership style is associated with positive outcomes such as increased job satisfaction and employee commitment. However, the effectiveness of transformational leadership may vary across cultures. For instance, the former management at Techinfo in India implemented this approach by focusing solely on motivating employees and keeping morale high. However, the new American owner is adopting a transactional leadership approach, which involves offering rewards for desired behavior by introducing incentive pay. This style may be particularly useful when employees value clear expectations and immediate feedback. However, this leadership style may be less effective in cultures where hierarchical relationships are emphasized since the local culture is built on such requirements. In addition, negative leadership practices such as micromanagement or abusive behavior can harm IHRM (Anlesinya et al., 2019). These practices can lead to high turnover rates, decreased motivation, and a toxic work environment. For instance, the new American owner’s decision to prioritise efficiency has resulted in very tight working schedules, which do not favour employees such as nursing mothers, thus resulting in low satisfaction and, in turn, poor customer service.
Performance management system
Based on the changes in culture and performance expectations at Techno after the acquisition by an American multinational, it is recommended that the company implements a new performance management system. This new one should focus on creating a more efficient and productive workforce while valuing and supporting employees (Jooss et al., 2021). The previous performance management system was not taken seriously since work was less about results, and employees had the liberty of refusing work in projects and areas that did not appeal to them, which has to be addressed in this new system.
The new performance management system should be designed to clearly define performance expectations for each employee and provide regular feedback. It should also include a mechanism for measuring and evaluating performance and identifying areas of improvement. This could be achieved through performance metrics, such as sales figures, project completion rates, customer satisfaction scores, and other relevant indicators that can be tracked and measured (Collings et al., 2019). Thus, the new performance management system should be based on individual and team goals, with clear metrics and expectations for each role. The process should begin with establishing SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) goals for each employee, aligned with the overall business objectives (Malik et al., 2021). These goals should be reviewed and updated regularly throughout the year, and progress toward them should be tracked and measured.
In addition to individual goals, team goals should also be established, which will help to foster a sense of collaboration and teamwork among employees. These goals should encourage employees to work together to achieve common objectives and support each other in their efforts. Here employees would be required to be very flexible and evaluated based on their contribution to their team, not just their roles. This means the team will be responsible for its successes and failures. This approach to performance management makes people accountable and more effective while aligning with the company’s new direction (Gabel-Shemueli et al., 2019).
Next, the performance management system should include regular performance evaluations, which the employee’s direct supervisor should conduct, and a more senior manager. These evaluations should be based on objective metrics and subjective feedback from peers, customers, and other stakeholders. This feedback should be used to identify improvement areas and develop plans for addressing these areas. It should also be specific, constructive, and actionable and focus on strengths and improvement areas (Gabel-Shemueli et al., 2019).
Several factors should be considered to ensure that the new performance management system is effective. First, the system should be transparent and fair, with clear metrics and expectations for each role. Employees should be provided with regular feedback and opportunities for growth and development. This feedback will be solely based on the set short and long-term goals. Second, the system should be aligned with the company’s overall business objectives and support the development of a more efficient and productive workforce. This means that the system should be designed to encourage employees to take ownership of their work and collaborate to achieve common objectives and will heavily depend on forming dynamic teams. Third, the system should be flexible and adaptable, allowing for necessary changes and adjustments. This means that the goals, objectives, and KPIs should be readily updated to ensure they help eliminate new areas of inefficiency.
Creating a new culture for Techinfo
As the company transitions into a more business-like and performance-oriented culture, it is important to establish values that align with the new direction and communicate these values effectively to all employees. First, Techinfo should develop a new set of core values. Developing a set of values that reflect the company’s new direction is crucial in creating a new culture for Techinfo (Isac et al., 2021). Thus, the new organizational values will focus on innovation by encouraging and embracing creativity and new ideas to continuously improve the company’s products, services, and processes. In this new culture, employees will be held highly accountable and must be collaborative and adaptive to different roles. In addition, the new culture will emphasize high levels of excellence and continuous learning to ensure employees maintain high levels of performance and productivity, meeting the new focus of the company as well as boosting their morale, resulting in a positive experience.
Secondly, the new culture should emphasize communication to communicate the values effectively. The company should also provide clear examples of how the values can be incorporated into day-to-day work and align with its objectives (Isac et al., 2021). Leaders must be available to listen to and communicate with employees’ issues. Communicating the core values effectively is essential in creating a new culture for Techinfo. The values should be communicated to all employees through various channels, such as training sessions, newsletters, and meetings.
In addition, a performance-driven environment will be developed. The new culture at Techinfo is more business-like and performance-driven. The company should create an environment that fosters performance, innovation, and accountability to support this culture. This can be done by setting clear performance goals and expectations for all employees and providing regular feedback and coaching to help employees achieve these goals (Isac et al., 2021). The company should also recognize and reward employees who perform well, and provide opportunities for career growth and development such as promotions and new leadership positions (Presbitero et al., 2019).
The new culture will encourage collaboration and teamwork since they are essential in creating a culture that promotes innovation and creativity, ultimately resulting in higher productivity and high profits. By forming cross-functional teams and promoting cooperative efforts, the organization should encourage staff to collaborate to solve issues and develop new ideas (Jie et al., 2020). Employees now have to be more adaptable and contribute to the team, as opposed to when they would reject working on projects and areas that did not suit them. Increased productivity and efficiency will follow from this.
Despite being centered on profits, the new culture will also strongly emphasize worker well-being. The organization should support work-life balance, offer chances for professional and personal growth, and place a high priority on worker health and safety. Offering flexible work schedules, giving access to wellness programs, and fostering a secure and encouraging work atmosphere are all ways to do this (Jie et al., 2020). Employee parents, for instance, can work flexible hours and be given moderate workloads to help them finish on time.
Integration of the Two Cultures
After the acquisition of Techinfo, there is a need to bring greater integration between its culture and that of the American multinational, and these recommendations provide a direction for achieving this. First, the business needs to have a shared objective and vision to properly integrate two cultures: Creating a shared objective and vision representing both firms’ values is crucial to fostering stronger cultural integration (Zhang et al., 2019). According to Schein’s cultural model, establishing a common culture requires having a common vision and objective (Presbitero et al., 2019). Thanks to the shared mission and vision, both companies will have a feeling of purpose and direction to work toward. As a result, both organizations’ goals and objectives will align more with one another, and a shared sense of identity will be developed (Presbitero et al., 2019). Second, the new business should develop training and communication initiatives for both. Communication is crucial to cultural integration since it enables staff members to communicate information and potential issues (Jain, 2020). For the staff members of the two organizations to communicate their viewpoints, ideas, and experiences with one another, communication channels must be established. Offering training courses that emphasize cultural sensitivity and awareness is also crucial. Hofstede’s cultural dimensions theory supports that training programs can increase people’s awareness of cultural differences, resulting in a better understanding and acceptance of one another’s values and views (Jain, 2020).
In addition, for more effective cultural integration, the organization should create cross-cultural teams: Creating cross-cultural teams can help to integrate the two cultures. According to Tuckman’s stages of group development, cross-cultural teams go through the stages of forming, storming, norming, performing, and adjourning (López-Sáez et al., 2021). During the forming stage, team members get to know each other, and during the storming stage, conflicts may arise due to cultural differences. Team members develop their ability to cooperate and respect one another’s differences during the norming stage (López-Sáez et al., 2021). Finally, the team works effectively to accomplish the new goals throughout the performing stage. Employees from both firms can benefit from one another’s perspectives and develop a shared understanding of one another’s cultures through cross-cultural teams. Here, creating teams with both Americans and Indians will assist in overcoming cultural hostility and differences, leading to more successful performance.
In addition, the organization should promote social interactions and chances between the two cultures for high cultural integration. The environment that will be created for employees to interact with one another will be more laid-back and welcoming thanks to this program. According to the social identity hypothesis, company personnel can develop a common identity through social events (Zhang et al., 2019). This shared identity can enhance employee teamwork and communication and foster a sense of belonging.
Finally, instilling reward and recognition programs can help to encourage employees to embrace the new culture. According to Maslow’s hierarchy of needs theory, employees are motivated by different needs, including recognition and achievement (López-Sáez et al., 2021). Recognizing and rewarding employees who embrace the new culture can help to reinforce the desired behavior and create a positive work environment.
Suitable forms of expatriation
Expatriation, or sending employees to work in a foreign country, is essential to global business operations. For Techinfo, a company that has recently undergone a merger with an American multinational, expatriation may be necessary to help bridge the cultural gap between the two organizations and ensure successful integration. However, choosing the right form of expatriation is critical for achieving the desired outcomes. This analysis explores the different forms of expatriation and recommends the most suitable one for Techinfo.
The three most common forms of expatriation are short-term, long-term, and commuter assignments. Short-term assignments are typically less than a year, while long-term assignments can range from one to five years or longer (Dickmann, 2021). Commuter assignments are when employees regularly travel between their home country and the host country. For Techinfo, the most suitable approach to expatriation should recommend a combination of short-term and long-term assignments. Short-term assignments can provide employees with cross-cultural training and exposure to the American multinational’s practices and culture (Dickmann, 2021). This will help Techinfo employees better understand the new company they have merged with and ensure a smoother integration process. Short-term assignments can also facilitate knowledge transfer between the two organizations (Presbitero et al., 2019). For example, an employee from an American multinational can be sent to Techinfo for a short-term assignment to train Techinfo employees on new technologies or processes (Jain et al., 2020).
In addition, long-term assignments can fill skill gaps and provide leadership and expertise to Techinfo’s operations. By sending experienced employees from the American multinational to Techinfo on long-term assignments, Techinfo can benefit from the knowledge and expertise of the American multinational’s employees. These long-term assignments can also help build relationships between the two organizations and facilitate knowledge transfer over an extended period (Jain et al., 2020). However, commuter assignments may not be suitable for Techinfo, given the distance between the two countries and the potential impact on employees’ work-life balance. Commuter assignments can also be costly and may not provide the same level of cultural immersion as short-term and long-term assignments.
In choosing short-term and long-term assignments, several factors need to be considered. Firstly, the selection of employees for expatriation should be based on their skills, experience, and adaptability to new cultures (Dickmann, 2021). Employees should also receive cross-cultural training before their assignment to help them adjust to the new environment. Secondly, the cost of expatriation needs to be considered. Long-term assignments can be expensive, and Techinfo needs to ensure that the benefits outweigh the costs. Techinfo should also consider providing adequate support for expatriates to allow them to comfortably.
Conclusion
The essay emphasizes the significance of international human resource management (IHRM) for successfully managing a worldwide workforce. Business culture, leadership, legal considerations, and cultural variations greatly influence its success. Negative results may result from failing to take these aspects into account. Implementing suggestions like developing new core principles, constructing a new performance management system, appropriate kinds of expatriation, and encouraging deeper integration between the two cultures is crucial to the merger between Techinfo and the American multinational company’s success. Techinfo can develop a culture of excellence, creativity, and cooperation by making these adjustments to help it succeed in a cutthroat international market.
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