Human Resource Management in Mnc Assignment 2022

Running head: HUMAN RESOURCE MANAGEMENT IN MNC
HUMAN RESOURCE MANAGEMENT
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HUMAN RESOURCE MANAGEMENT IN MNC
There are four main elements that are required to conduct a business and they are
land, capital, entrepreneur and labour. No business can run smoothly within an absent of
either one of these elements, be it a small scale business or a multi-national corporation
(MNCs). Undisputedly, labour is considered to be the most vital asset for effectively
conducting a business. It is through the employees of the business that its success and failure
is determined since employees are the one to create and undermine the reputation of a
company. This is why, the modern organisations, particularly the MNCs, foresee the
importance of well-being of their employees as well as their interaction with the firms and
here lies the importance of effective human resource management (HRM) for interacting and
dealing with the representatives of all the sources of production (Park, Chidlow and Choi
2014). This paper shall elaborate on discussing about the strategic role played by HRM
within the context of multinational companies (MNCs) operating in the global environment
and it would further discuss how the cultural and institutional differences between home and
host country impact on the design and development of global HRM policies and practices for
MNCs. Lastly, a brief discussion shall be presented discussing whether the MNCs should
have different global staffing and performance management (PM) approaches and how such
different approaches impact on different cohorts of employees of MNCs.
The strategic role of HRM within the context of multinational companies (MNCs)
operating in the global environment- It is to note that HRM (Human Resource Management)
is considered to be an integral set of the personnel activities such as compensation, industrial
relations, human resource planning, performance management, development and training,
staffing etc. that are related strategically with the overall organisational objectives. It is to
note that with the advent of globalisation in recent years, the organisations all around the
globe, be it big or small, have completely creased to be local and they have become global
(Harzing, Pudelko and Sebastian Reiche 2016). This have resulted in an increase in the

HUMAN RESOURCE MANAGEMENT IN MNC
workforce diversity and at the same time, cultural sensitive have emerged in way like never
before. These further have developed the global human resource management. It is to
mention that strategic HRM or SHRM is all about leveraging people for implementing and
achieving the intended strategies of the organisations and it is based on the “resource based
theory” of the firms (Sekiguchi, Froese and Iguchi 2016). However, it is to note that are many
different types of existence of the multinational corporations in the international business.
Terms like polycentric, ethnocentric and geocentric are used for denoting the different types
of MNCs and the role that strategic HRM plays is different in different nations and different
types of MNCs. These roles of HRM in multinational corporations could be categorised into
the below mentioned five main areas:
a) Recruitment and selection- Recruitment refers to the process of discovering the sources of
manpower for meeting the staffing requirement and stimulating them for applying for the
organisational job. It is to note that in MNCs, the process of recruiting needs to be carried
out under consideration of the culture adaption, the global reward system as well as the
type of the very MNC. For instance, the corporations that practice ethnocentric are likely
to find the important position in the subsidiaries by the employees in the home nation. On
the other hand, for the polycentric MNCs, they are likely to recruit the nationals of the
host country for managing the subsidiary in their own nation. Lastly, in the geocentric
MNCs, they recruit the suitable candidate regardless of which nationality they belong
(Verbeke and Kano 2016). Hence, it is the responsibility of SHRM in the MNCs to suit
the process of recruiting with all the recruitment policies for adding value to the
operations of these companies.
b) Training and development- The HRM within the MNCs operating in global environment
or in international level is also responsible for the development and training of the
organisational employees. The development and the quality of the employees are all

HUMAN RESOURCE MANAGEMENT IN MNC
improved through the education and training and this determined the company’s
profitability in the long term. Training could help in increasing the employee job
satisfaction, reducing the turnover while improving the performance and employees’
skills. They also help in motivating the employees that are likely to help the employees
and the companies in turn. In the diverse types of multinational corporations, there are
different training types for different employees (Mahmood 2015). For instance, in the
polycentric organisations, they offer training to their employees to provide personal
flexibilities and cultural awareness. They send them for the language training, cross-
cultural training, environmental briefing etc. It further helps them in adapting the culture
and perform their job role in effective manner. However, in the ethnocentric MNCs, their
training processes are more centralised.
c) Remuneration- It is to note that remuneration refers to the rewards and compensation that
are given by the company for the employees on the basis of their performance. It is a one
way for motivating the employees for performing efficiently and effectively. As per the
recent study by (), remuneration in the MNCs is increasingly becoming complicated
because of the currency fluctuation, different HR staff remuneration practices and policies
along with the different labour law in different countries. It is to mention that salary is a
psychological employee needs as per the Maslow’s hierarchy needs. This reflects the
employee performance and at the same time also determines their living standards, while
planning for remuneration, employee salaries, particularly for the transfers from other
location needs to be considered. The scheme and the methods for remuneration also differ
in different MNCs. The remuneration cost for the ethnocentric MNCs would be high as
compared to the geocentric and polycentric organisations as it helps in transferring the
staffs from the headquarters.