Question 1: Approach under use when taking iHRM in international context along with a short review on HRM and iHRM.
Human resource management is all that relates to human in a working environment of how people are under control and managed by managers to work accordingly with organizational goals and purposes. It covers how people are being employed and directed to work within organizations. Subsequent to the concept of human resouce management, its international version concern out-of-domestic environment where managers have to deal with employees who live in a different or distant regions and possess different mindsets and cultures. All in all, management of people in international environment means the way organizations deal with employee in the broad areas they operate (Hassan, 2013).
In an effort of dealing with issues that relate human resources in an international context, many researches were conducted into finding most applicable solutions to these issues so as to manage employees effectively and efficiently. In a sense, it is concluded to have four basic approaches to international human resource management attempts including ethnocentric approach, polycentric approach, geocentric approach, and regiocentric approach (Wall et al., 2010) and each of them attribute different results in accordance with primary purposes of the organizations. For individual purposes of the organizations, each kind of the approach aim to suit with different aims on their distinct strategy (Nitsche, 2003). It is discussed that the way researchers can categorize and examine different international human resource management can be based on their differences and commonalities in multinational regions (Nitsche, 2003).
As each company comes with each kind of human resource management approach depending on their purposes in different terms (short term and long term), it is required that there comes an effective and efficient system on how employees are judged. As to lay an effective control on the subsidiaries, performance management is insisted to be managed and used well to understand and capture employee performance from such distance. This turns even more important especially in large international companies because controlling employees worldwide is not an easy puzzle. Regardless of all the differences that exist within multinational environment, an effective performance management system play an pivotal role towards both employers and employees.
In definition, performance management is what measure and quantify how much effective and efficient an action creates for the company (Neely, Gregory and Plats, 1995). It is the process of when expectations and results are put on comparison and so to enhance the decision made in the future (Lardenoije et al., 2005) and this measurement should be relied on data comes from either financial or non-financial factors as well as refer to both internal and outside stakeholders (Slavic, 2014). Moreover, such demonstration from the performance need to base on the goals of the company as it should be capable to reflect the competitiveness of the company on the outdoor market, customer demands and the company’s internal aims (Kennerley and Neely, 2002). Besides, performance manager refers as the way compensations are handled (Berber et al., 2012). And so, refering to internaltional context where there is expatriate force in the employment, obviously there will be differences in the way they and the domestic workforce under performance measurement considering different factors that affect their success and failure in organization are different (Brewster et al., 2007). Therefore, universal version of performance management system is designed to aim at values and goals of the firms in accordance with different contexts (Engle et al., 2008;Festing & Eidems, 2011). By using a widely-applicable model of performance management, companies who expand internationally employ to manage and examine human resource in international context. Moreover, in the process of creating a universal template of performance criticizing, apart from modifying a uniform structure, it is necessary for the local to have it owns adaptation in order to meet up with local conditions and needs (Evans et al., 2011). Therefore, the process of creating performance management on international context divides into standardization and localization section (Slavic et al., 2014). All in consideration, the overall aims of performance management are for evaluation which refers to development of the employees and organizations in host and parent countries (Cascio, 2006), and these result in all multinational companies can achieve aligning with their intrinsic goals of worldwide scale. It is required to have universal evaluating template in order to determine the contribution of international employees which aim more at expatriates (Slavic et al., 2014).
On observing Coca Cola and Pepsico which are within FORTUNE 500 companies, the companies’ example on performance management provide the model for other companies to follow. Similarly, both companies believe on the concept that human play an important role and an company indispensable assets. On this behalf, they invest much on employee so that they could reach their highest potential. Companies invest in creating perfect environment to develop employee’s ability to work effectively and efficiently either independently or in team. In addition, they provide performance and reward assessment system for contributions of the employees basing on core attribute to overall strategies. On both companies, career paths are clearly developed as they provide core position list which inspire employees and promise them leadership position provided that they meet the demands of roles’ expectation and standards as well as specific experience. Moreover, both companies also consider employment engagement with the companies in the long-term whereas they promote values for better engagement as well as consider safety and health within. In a sense, both companies employ identical concept of performance management, going from recruiting to developing their employees through training and learning sections, then rewards for employment retention (Mathis and Jackson, 2011). Both companies invest heavily on the human assets in terms of performance management as this is important for overall control and gain in international business context.
Question 2: Dicussion and Evaluation with empirical theories, rationales and examples for the claim:“Globalisation means that eventually HR policy and practice will converge into a single ‘best practice’ everywhere in the world.”.
According to the definition given by the BBC (British Broadcasting Corporation), globalization signifies the meaning of "increasingly interconnected" globally. The term is likely to refer as if it means worldwide applicable accessibility. Globalization can be argued as an aim to achieve convergence everywhere else in the world. From this point, it can be understood that multinational companies aiming at globalization as a basis for international expansion need to find uniformity in how they manage organizations from headquarters to subsidiaries in host countries. It is called globalization as everything is used in one single form, template, shape, and order. It simplifies function because it is far-fetched to achieve a highly quantitative scale if things go complicated finally. For this reason, to achieve the globalizing effect, there needs to keep things simple. Therefore, things should be boiled down into simple forms. Applying this in the international context of managing people, to be particular, the HR policy and practice are required to be simplified as to be used everywhere else regardless of the least impact from cultural and regional differences. In this way, HR policy and practice judge employees in multinational companies fair enough regardless of regional conditions. This later forms uniformity.
As uniformity is created, it does not acquire control since HR policy and practice are encouraged to be simple and throughout in a generally worldwide applicable template and power to go globally, expanding the economic scale by simplifying the process to reach the efficient level of organizing. To reach the highest level of homogeneity, globalization is the most desirable catalyst, a basis that multinational companies could not strive to develop without.
For a while, it remains a topic of interest of whether definitions for globalization; however, this left more of a complex issue and a mother of debatation by support holders and other critics. Because it depends on many factors such as local criteria like culture or language and pressure from the market to finally come to a best fit to describe implications for human resource management for multinational enterprises (MNEs). Therefore, it is hard to boil down to a fully-described definition of globalization with regards to HR policies and practices considering global firms in international context. As far as it concerns, there are still many processes used by MNEs which can be considered as much globalized as it seems; however, can still be inapproriate to an extent (White, 2015). From argument by White (2015), it can be understood that globalization manifestation is what, for instance, policies and practices in an MNEs that can be used or fit well to the local conditions and environment (culture, language, religion) in any of their subsidiaries in global context. An example of good policies and practices globalizing in iHRM is the policy and practice that can be applied perfectly in any where else in the world without resistance from local and host country’s barrier.
There are many successful policies and practices that are being used by many multinational enterprises (MNEs) in their international human resource management strategy (iHRM). In this review, the essay tends to concern and focus on the policies and practices of how employees are hired under what criteria and standards were used in MNEs in South Korea. For instance, in the recruitment policies and practices of South Korean MNEs, such hiring process concern to use expatriates workforce for senior managerial roles. In fact, there were more local and korean chinese in the Chinese market were hired to the position low and middle level managers in South Korean MNEs while there are more of Host-country nationals (HCNs) were hired in the roles of deputy directors (Kang and Shen, 2012). In Hyundai Motor Company, according to Lans Bury et al. (2006), the recruitment bullet points for focus more on whether HCNs can work repetive and monotonously bland work as well as ability to collaborate in team, these standards relate to the Korean ethics in work which represent willpower (Paik and Sohn, 1998).
On the one hand, it is argued by Yang and Kelly (2009) and Paik and Sohn (1998) that South Korean MNEs are believed to possess orientation for ethnotrism as more expatriates are relied in subsidiaries, while on the other hand, it is argued by Glover and Wilkinson (2007) that there was a shift in South Korean MNEs in their iHRM policies and practices from ethnocentrism to polycentrism. Local employees in subsidiaries are believed to have superior knowledge of the local environment; therefore, there is a tendency to have fewer South Korean expatriates. However, according to Ahn (1998) and Bae (2004) though the number of South Korean in subsidiaries acknowledged a decline, because of the parental country orientation, there is still a strong connection between them and the headquarter. This profound connection is a basis for solid control on abroad subsidiaries.
In USA, according to Kim and Slocum (2008), English fluency is most pivotal criteria when considering a position for employees as well as the premature return willingness from South Korean. Such factor was followed by the experience in international environment because this is believed to help reduce the failure possibilities.
In the study by Zou and Lansbury (2009), regarding Beijing Hyundai Motor Company (BHMC), it was required by the local govenrment where subsidiaries are operated that the company recruit local employees while with the workers who are expatriates, there requires approval from government. Because of this policies, parent country are opted for the local workforce more than expatriates not only because this policy and practice fit their strategy of which focus on local understanding but also do a favour for goventment interest.
Due to the aforementioned rationales given by empirical studies, MNEs of South Korea have a tendency to orient for ethnocentrism when it comes to iHRM approach, which can be seen in their policies and practices used in recruitment process. In their recruitment process, though expatriates are welcomed for senior managerial positions; however, there requires a number of parent country employees that keep a strong connection with parent country in terms of implementing homogeneity throughout the MNEs. This is also compounded by the fact that such ethnocentric approach could be rooted in Greenfield strategy requiring knowledge transfer by expatriates and headquarter’s exercising control, which is usually adopted by South Korean MNEs (Kang and Shen, 2012). Moreover, according to Paik and Sohn (1998), Korean MNEs are indifferent to adjust their home policies and practices so as to match with the home cultures of subsidiary countries. Besides from this, evidence that South Korean MNEs are on a transfer shift from ethnocentric approach to polycentric approach in recruiting policies and practices is that more expatriates and host-country nationals are being hired. This is also reflected in the UK where more HCNs and local staffs are being hired to fix production issues. In addition, given a better knowledge of the local environment, exclusive interpersonal skills as well as the increase in international experience portrayed by local Chinese and ethnic Korean Chinese, they are encouraged by South Korean MNEs to taker over from expatriate managers (Kang and Shen, 2012). It is suggest by Shen (2006) that such trend mentioned above which refers to increased overseas experience in HCNs that there will be a tendency to either reduce or increase the use of home country expatriate to subsidiaries; however, still this relies on the different needs at different stages of operation. As the local employees manage operation effectively and control are effectively maintained by the headquarters, there are to be more demands on localization and more local workforce will have more important roles. And this could reason for that South Korean MNEs are already shifting from ethnocentrism to polycentrism and use this as international HRM policies and practices; for instance, Beijing Hyundai Motor Company (BHMC).
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