Impact of Globalization on Human Resource Management in Australian Business Industry

This study deals with the impact of globalization on human resource management in Australian business industry. It highlights the challenges faced by HRM due to labor demand, supply, demographic changes and environmental changes. The study suggests that internal replacement and succession planning need to be undertaken by HRP to deal with the current changes. The external changes such as political, legal, emergence of new technology and foreign competitors are the major factors that affect the HRP of Australian business.

Running head: HRM
Human Resource Management
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Globalization focuses on the imbalance of labor demand and supply in many countries.
However, higher price in the labor market leads to decrease in labor demand by the
organizations. On the other hand, low salary is beneficial to increase the labor demand in the
market (Davidson et al., 2014). Due to globalization the income level of labor becomes
decreased while demand for the skilled employees becomes increased. On the other hand, huge
competition is another factor of globalization that makes a high demand for skilled labor and the
supply is low due to demographic issues. On the other hand, environmental and demographic
changes are the other impacts of globalization that lead the organization to change their
recruitment and selection process. This study deals with the impact of globalization on human
resource management in Australian business industry.
Globalization creates major challenges for the business industry includes labor demand,
supply, demographic changes and environmental changes (Hainmueller, Hiscox & Margalit,
2015). However, demographic changes are a big factor that leads the organization to increase
diversity in the organization. In the previous, the business organization does not allow working
the people who have any kind of disability. On the other hand, gender discrimination is another
part of that often see in business. Globalization focuses on women participation in every business
sectors that is called labor force diversity. As commented by demographic changes highlight
diversity and diversity alters the needs and potential of employees. Hence, changing
demographic profile a wider population highlights the importance of developing new strategies
by the organization based on the need of the country’s citizens. Changing environment is
another new challenge for human resource management in a country. However, Australian firms
are facing new demand and requirements due to the changing environment. Environmental
changes lead the human resource managers to cope up with the speed, which is difficult for the

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manager to adopt. However, environmental changes include political, social, economic and
technological changes. All these factors influence the HRMP. It is a great challenge for the
Australian business about how they adapt their workforce in a changing environment.
Environmental changes include the rise of knowledge economy, innovation imperatives,
changing technological paradigm and emergence of new skill (Hervas-Oliver, 2013). Apart from
this the global economic crisis is a big pressure for Australian firm to reduce cost along with
managing workforce.
On the other hand, critical imbalance is seen between the demand and supply of the
labor in Australian business industry due to the globalization (Beesley & Davidson, 2013). As
for example, it has been found the Australian hospitality industry has high demand for skilled
labor while the supply is low. Skill shortage is the major issue of HRM in Australian hospitality
sectors. Therefore, Australian tourism industry also faced challenges due to poor policy of the
human resource department during the recruitment and selection. Australian tourism and
hospitality sectors are the big examples that are facing skill shortage crisis in the recent years.
Hence, shrinking workforce created by the aging population is a big barrier for HRP to
incorporate new skill into their organization. It is patently obvious that HRP in Australian
business sectors will be stagnant if they do not put proper strategy to address the recent skill
shortage in the workplace.
Impact of globalization leads the HRM to understand that job role will not remain
unchanged. However, due to the shortage of labor skill, demographic changes and environmental
changes the HRP needs to focus on internal replacement and succession planning. Internal
replacement in workplace and succession planning should be the major focus of HRP in an
organization as it will help the HRM to deal with the current changes (Ward, 2016).

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Replacement planning is the process of long term or short term backup. This leads the
organization to assume that they have people with good accountability and responsibility.
Replacement keeps the business continuity and allows the organization to deal with the talent
shortage. A replacement focuses on the critical job role of the existing employees in an
organization. The current position of the employees, their competencies, facilities and vacancies
are the major components of critical job role. Replacement can be done based on four categories.
Hence, the HRM of Australian business industry can carry out the replacement by identifying the
employees who are ready for promotion and who are not fitted for the employment.
Apart from this employees who are ready for future promotion by taking additional
training and employees who need motivation by promotion can be replaced. Often HRP focuses
on promotion based on the experience and seniority. This approach is not applicable during
globalization as environment is changing rapidly as a result; the need of an organization is also
changing (Fulmer, 2015). The demographic changes highlight the diversity and gender equality.
Based on this replacement can be done by recruiting female employees in the position of male
employees. However, if the female employees have good skill in comparison to male then they
should be recruited or promoted. From this analysis, it can be evaluated that job replacement can
be done based on the skill and knowledge rather than the seniority. HRP needs to replace the
people who are not fitted to their designation (Baum 2016). This internal replacement is done by
recruiting or promoting skilled candidates in the position of old candidate.
Succession planning is an evolving process. Human resource department needs to
change their succession planning over the time (Julius Giarmarco, 2017). Based on current
challenges it has been addressed that environmental changes and imbalance of labor demand and
supply can be controlled by using proper succession planning. Globalization increases workplace

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diversity and reduces the grooming time of the employees. This is a big barrier, which need
strategic succession planning in an organization. Leaders should be open with their ideas, which
will boost the succession planning. It has been identified that skill shortage is the major
outcomes of imbalance between the labor supply and demand. To deal with this issue HRP
includes tool for employee development (Inyang & Akaegbu, 2014). By providing training and
using job rotation tactic are beneficial to develop the skill of the employees and to deal with the
skill shortage issue. Involvement of the talent in the business planning is another succession
planning that is carried out by HRP. HRP focuses on the selection of most potential leader to
improve the succession planning in an organization. In order to carry out an effective succession
planning identification of desired job position is crucial. Therefore, identification of the
capabilities of the key areas is done. Therefore, assessing the interested employees and measure
them against them against the capabilities (Michel & Kammerlander, 2017). The final step
includes implementation of the succession plan through introducing knowledge transfer plan.
HRP prioritizes the development needs of then individuals in an organization.
Implementation of diversified and holistic intervention tool is an effective approach of HRP to
improve succession planning (Baum, 2016). It can be evaluated that by incorporating succession
planning and internal replacement HRP can reduce the skill shortage and impact of demographic
changes and environmental changes while managing workforce. By using the internal
replacement and succession planning HRM department of an organization makes a balance
between the globalization and the business performance. Technical change is the major challenge
of environmental change, which can be controlled by developing staff skill through succession
planning. On the other hand, internal replacement plan helps an organization to deal with the

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shortage of skilled labor. Such HRP also allows an organization to identify the external changes
in a country.
HRP needs to focus on the external changes that influence the Australian
business. One of the major external changes in Australia is the changes in political leader or
government. However, political persuasions and government changes after a certain time in
Australia. Changes in the government alter the demand of the target market, labor supply and
business processes. Hence, the HRP focuses on KRIs to identify the changing regulations of
Australian government as government regulation often affects the recruitment process.
Australian government has focused on environmental protection law and Fair Work Act law that
alter the operating process of Australian industry. In the year 2009, the labor law in Australia had
undergone drastic changes, which also affects the labor supply. Business interruption risk is
another major external change that is faced by Australian business. In South Australia, major
blackouts had taken place that caused damage of property (Biggs et al., 2015). To deal with such
risk HRP must focus on risk management strategy.
Change in the legislation is a major driver of Australian business. However, in the year
2017 many regulatory activities are implemented in Australian insurance sectors.
Implementation of Australia’s corporate and consumer regulator Act is introduced in 2017.
Therefore, an introduction of Immigration Restriction Act reduces the entry of non-European
in Australia. This is another reason of shortage of skilled labor. Hence, changes in legislation and
laws must be taken into account by HRP to reduce any legal obligation from their recruitment
process. Development of macroeconomic is another big change in Australia business industry.
Australian dollar is stable for 12 years. However, a few years ago it was US$1.10 and today it is
US75c (Martin-Sardesai et al., 2017). Price has been fallen in the commercial sectors that may

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create challenges for the business sectors. This leads the business to cut the labor cost and face
high turnover.
New emerging technology results in digital disruption and cyber incidents.
However, new technology allows Australian business to enhance their communication globally
and improve their business operating system (Lai, Morrison-Saunders & Grimstad, 2017). On the
other hand, often it is difficult for the business sectors to keep balance with the emerging
technology due to shortage of skilled labor. On the other hand, cybersecurity risks take place
due to the incorporation of digital technology in business. Introduction of new technology is a
biggest external change in Australia that is facing currently by the business owners. Increased
competition due to the foreign investment forced the Australian business to change their
business strategy and operation. As for example, Australian retail organizations are facing issues
due to rising international online retailers. They offer a wide range of products at low price and
high wages to the labor. Hence, from the analysis of external factors, it can be evaluated that
HRP of Australian business sectors must give their concern to these current external changes.
Based on the review of external changes a proper HRP can be developed, which will reduce the
skill shortage and impact of environmental changes from the business.
The above piece of work highlights the human resource management and HRP in
Australian business sectors. However, it has been observed that imbalance in labor demand and
supply, demographic changes, and environmental changes leave a big impact on the workforce
management in an organization. Hence, internal replacement and succession planning need to be
undertaken by HRP. Apart from this political, legal, emergence of new technology and foreign
competitors are the major external changes that affect the HRP of Australian business.

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