Challenges Faced by Multinational Companies in Transferring HR Practices

This article discusses the challenges faced by multinational companies when transferring human resource practices across borders and how emerging multinational corporations address these challenges. It covers topics such as globalization, technological advancements, workforce diversity, and economic conditions. The article also provides solutions such as cross-cultural training, motivation, adherence to laws and legislation, use of innovative technology, and agility in HR strategies.

Human Resource
Management
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EXECUTIVE SUMMARY
Human resource management plays an important role in an organisation as it help in
recruiting and selecting best candidate who can perform activities of the company in an effective
manner. In addition to this, they maintain a good relationship between the employees that has
positive effect on the productivity and profitability of the company. There are various challenges
face by multinational companies when transferring HR practices from host country to another
such as organisational change, environmental change, technology and many more. There are
different ways to overcome with these challenges in a proper manner and effective manner like
training to employees, motivate staff members and so on.
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Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
LITERATURE REVIEW................................................................................................................4
Challenges MNCs from emerging market face when transfer human resource management
practices across borders...............................................................................................................4
How emerging multinational corporations address these challenges..........................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Human Resource management is a process that involves planning, organising, recruiting and
selecting right person for the organisation. Human resource plays vital role as they helps in
hiring talent which in turn assist companies to attain their objectives or desired goals within
stipulated time frame (Horwitz and Mellahi, 2018). In addition to this, it assist businesses in
gaining higher growth as well as success in market. In order to implement human resource
management practices, it is important for an organisation to have talented and skilled workforce
who carry out activities in a smooth and proper manner. For the present report, Billabong
Company is taken into consideration. It mainly deals in clothing, watches, backpacks and many
more. The company was established in the year 1973 and at present it has more than 11,000
stores worldwide that gain success because of its 6,000 employees. The report covers challenges
faced by multinational companies when they transfer human resource practices across borders. In
addition to this, how emerging multinational companies tackled or address these challenges is
discuss in the report.
LITERATURE REVIEW
Challenges MNCs from emerging market face when transfer human resource management
practices across borders
According to the Prabhashini Wijewantha, (2019), Human Resource managers face many
problems and many challenges when implementing HRM practices from home country to other
countries. One of the challenge faced is Globalization, it is defined as an extension across
national borders of the product and services of the company. Nowadays, world trade & financial
markets is becoming more integrated and arise problems for HRM of an organisation. Growing
the business at international level occur challenges such as language barriers, unfamiliar laws,
work ethics, competition, management style and many more. It is essential for human resource
managers to deal with such problems in a proper manner. For this, MNCs can adopt
heterogeneous functions and can increase involvement in life of their staff members as it
maintain a motivational level in employees due to which they are easily cope up and accept
uncertainties if arise in the future. Another challenge that has been analysed is advancement in
technologies that has an influence on nature of work and performance of an organisation.
Nowadays, technology is changing rapidly and it is important for companies to adopt so that they
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can remain in competition and gain success within the market. Advanced technology decline the
number of jobs which needs little skill and raise employment opportunities that require
considerable skills that is a shift from touch employees to knowledge work. Due to change in
technologies, it is getting difficult for multinational companies to implement human resource
practices. For this, they require advanced technology as employees are now becoming more
aware and prefer to use those software’s which is new and assist them to gain knowledge and
growth as well. In order to do this, human resource department need to give training session to
employees so that they can gain an insight regarding new technology that leads to increase in
skills and competencies of employees of the company. In organisations, there are employees who
did not easily agree to accept new technology, neither had they wanted to learn new practices as
it creates a problem for HR managers to implement human resource practices from home country
to another foreign countries.
As per the view point of Maria, (2017), Human resource manager face a lot of challenges
in the day-today working and solve it in an effective manner. The major issues and challenges is
occurred when they transferred human resource practice across the borders or from home
country to host countries. The author divided the challenges into 3 categories that is individual
challenge, organizational challenges and environmental challenges (Brewster, Mayrhofer and
Farndale, 2018). It has been analysed that problems arise by external factors prevailing in the
environment is come under environmental challenges. It is important for companies to focus on
external factors as it effect on the working activities and productivity of the company. In order to
face and deal with challenges, companies use different frameworks and model which assist them
to identify factors that influence on productivity and profitability of the company. The challenges
involve lack of skills, legislation, globalization and many more. All these issues possess a threat
to company due to which organisations is not able to implement human resource practice within
the organisation. Another challenge is organisational challenge and it is important for human
resource managers to develop measures for coming challenges. It includes challenges such as
organizational restructuring, competitive position, flexibility, culture, action of self-managed
teams and so on. These challenges can be deal by HR managers by adopting various measures
such as developing of norms, standardised policies, controlling cost and so on. It is essential for
an organisation to enhance productivity of staff members that is depend on the education and
training providing to the employees. This is considered as a challenge as many employees did
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not want to learn new things, they are satisfied with the existing activities and in order to make
them agree is such a big challenge for human resource manager. Ethics & social responsibility,
brain drainage, job insecurity is also consider as a challenge that is faced by HR manager while
implementing practices to another country.
According to Nasima Mohamed Hoosen Carrim, 2018, Multinational companies globally
are facing challenges in developing HRM practices in their subsidiaries. Now the countries are
become more integrated and multinational companies face many complexities. There is less
focus on the structure and more emphasise is shift on the human resource policies and practices.
This resulted in seeking human resource strategies and practices which can be imposed across all
the cultures. Globalization promotes a set of HR practices, local culture, institutional
arrangements & labour practices. Companies are find it more difficult to make duplicate human
resource practices between geographically & culturally dispersed subsidiaries. Human resource
practitioners within subsidiaries have strategic partners in multinational companies whose main
objective is to advise worldwide human resource managers on local & cultural problems that
assist in attaining objectives of organisation within stipulated time frame and also make easier
for human resource managers to implement HR practices in a proper as well as effective manner.
It is important for HR practitioners to gain an insight regarding how multinational companies
perform in subsidiaries as it have ah high influence of human resource policies. It is determined
that international companies are developed in host countries and adopt best fit model neglecting
the local conditions of that particular country in which it established. For instance, local job
regulations were applicable to company in host countries and due to its powerful position it
implement job system which over code subsidiaries. In this case, multinational companies accept
some of the human resource management practises to local conditions but if they get the power
they will surely converge it as per the need of host country (Boella and Goss-Turner, 2019). This
arise a challenge for human resource managers so it is essential to implement HR policies that
has influence on the wellbeing of host country where the organisation is working. In addition to
this, sometimes HR practitioners is not able to identify the culture of other country and due to
this they are not able to develop policies according to it. This will result in non-acceptance of
policies by employees which have a negative impact on overall efficiency of the organisation.
According to the view point of Mohamad Ayub Khan, (2019), it has been analysed that
one the major challenged faced by companies when transferred human resource practices across
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borders is Workforce Diversity. This factor involve work experience, geographic location,
gender, age, ethnicity, educational background, income, parental status, marital status and many
more. The problem is occurred in the organisational when people at workplace is of different
culture, language, values. Along with this, the challenges is arise for HR manager when
employee’s perception is not matched towards the practices and strategies build by Human
resource of an organisation. Due to change in values and environment of workplace, the foreign
employees find it difficult to cope up with it that arise a challenge and have influence on the
decisions taken by managers and HR of the organisation. If it is talked about Billabong, its
higher authorities ensure that no problems is arise when company will start operating in other
countries. For this, they develop a backup plan and identify risk by using various tools which
helps in developing effective strategies for the problems that will occur at the time of performing
business operations in other country. It is essential for human resource manager to create backup
plans as it assist them to easily deal with difficult situations. Another challenges that is
determined is change in economic environment that have influence on the overall productivity
factors of the organisation. Due to change in economic environment there is scarcity of raw
materials, demand of quality product is high and customer are become more aware. For this, it is
important for companies to have aspiration and highly influenced workers and to gain this
companies require to pay higher wages and give benefits to staff members that have impact on
human resource practices (Berman, 2019). The revolution of information technology that effect
HRM by HRIS (human resource information system) assist in processing information & enable
HR manger to provide data easily to higher authorities. Thus, the use of computerised technology
consider as a challenge for an entity which has influence on strategic & coordination level of the
company.
How emerging multinational corporations address these challenges
There are various ways by which these challenges can be addressed or overcome by
multinational organisation are as follows:
 One of the solution is providing cross cultural training to human resource personnel
which assist them to gain an insight about culture of other people prevailing in host
country. This assist them to develop effective human resource management practices that
leads to raise in productivity and efficiency of an organisation.
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 Another way is to motivate personnel so that they did not leave organisation and retain
for longer time frame. It assist in cut down cost of an organisation to recruit new
candidate. It is determined that employees did not always motivate by financial benefits,
there are also non-financial motivation such as training of staff members, encouragement,
job satisfaction and many more.
 It is essential for human resource manager to have knowledge regarding all the laws and
legislation of other country so that practices can be transferred easily without any
interruptions and conflicts. Along with this, it is significant for higher authorities of
company to ensure that all laws is followed as it assist to implement activities in a smooth
and proper manner.
 Human resource should use innovative technology or advance technology in order to
cope up with the changes that take place due to change in technologies (Armstrong and
Taylor, 2020). This technologies assist an organisation to transferred human resource
practices to other countries in an effective manner. It has been analysed that technology
helps an organisation to provide on time service and to gain knowledge regarding new
practices.
 Shifting of human resource strategy with change in the economy, strategy and practices
should be agile so that it can be capable of coping with changes that take place in
economy. It help companies to deal with uncertainties and deal with the situations in an
effective and proper manner.
CONCLUSION
From the above study, it has been concluded that there are various challenges which is faced
by emerging multinational companies while transferring human resource practices across
borders. These challenges are technology, economic conditions, workforce diversity, change in
laws and legislation, government legislation, different culture and many more. It is important for
an organisation to identify all external and internal factors before implementing HRM practices
as it assist in declining level of conflicts occurred at workplace. In order to overcome with this
challenges, using of innovative technologies, follows all laws and legislations, cross culture
training are consider as some of the ways to overcome with this challenges. It is important for an
organisation to overcome with these challenges effectively and timely as it help companies to
gain higher growth and success as well.
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REFERENCES
Books&Journal
Armstrong, M. and Taylor, S., 2020. Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
Berman, E. M., and et. al., 2019. Human resource management in public service: Paradoxes,
processes, and problems. CQ Press.
Brewster, C., Mayrhofer, W. and Farndale, E. eds., 2018. Handbook of research on comparative
human resource management. Edward Elgar Publishing.
Chelladurai, P. and Kerwin, S., 2018. Human resource management in sport and recreation.
Human Kinetics.
Kaufman, B. E., 2019. Managing the human factor: The early years of human resource
management in American industry. Cornell University Press.
Morgeson, F. P., Brannick, M. T. and Levine, E. L., 2019. Job and work analysis: Methods,
research, and applications for human resource management. Sage Publications.
Stewart, G. L. and Brown, K.G., 2019. Human resource management. John Wiley & Sons.
Online
Emerging trends and challenges in human resource management, (2017), [online] Available
through: <https://blog.essaycorp.com/emerging-trends-and-challenges-in-human-resource-
management/>
Challenges faced by MNCs, (2019), [online] Available through;
<https://www.igi-global.com/chapter/challenges-faced-by-south-african-human-resource-
practitioners-in-multinational-corporations/144385>
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