Human Resource Management Report: Standardization vs. Localization

This report delves into the critical aspects of Human Resource Management (HRM), specifically focusing on the contrasting approaches of standardization and localization within multinational corporations (MNCs). It begins with an executive summary and table of contents, followed by an introduction that outlines the report's objectives: to analyze the appropriateness of standardization and localization, identify reasons for differences in HRM practices across countries, and assess the impact of organizational and local culture on employee empowerment and motivation. The report explores the definitions and applications of standardization and localization, providing examples of companies like Toyota, Canon, IBM, Nestle, and Philips to illustrate their implementation. It examines the factors influencing the adoption of each approach and highlights the reasons for differences in HR practices across countries, including cultural dimensions (Hofstede Model) and diversity issues. The report also discusses the implementation of these approaches for managers, emphasizing the importance of balancing standardization and localization to achieve organizational effectiveness. The report concludes by summarizing the key findings and providing a list of references.

Running head: HUMAN RESOURCE MANAGEMENT
Human Resource Management
Name of the Student
Name of the University
Author note

1
HUMAN RESOURCE MANAGEMENT
Executive Summary
The report has thrown light on the overall analysis of the different kinds of approaches
related to standardization along with localization in the human resource management
practices which helped in improving the overall scenario effectively. Furthermore, with the
help of the different examples, the different kinds of approaches of HRM have been
identified through providing proper instances of different companies which have
implemented such procedures in improving the organizational effectiveness. Lastly, the
different kinds of strategies have been analysed to enhance the motivation among the
employees in the organizations.

2
HUMAN RESOURCE MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Appropriateness of Standardization and Localization...............................................................3
Standardization.......................................................................................................................3
Localization............................................................................................................................4
Implementation of Standardization and Localization Approaches for Managers..................5
Reasons for Differences in HR Practices in Different Countries...............................................6
Impact of Organizational or Local Culture on Empowerment and Motivation of Employees
concerning Organizational Effectiveness...................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................11

3
HUMAN RESOURCE MANAGEMENT
Introduction
The report throws light on the overall analysis of the different approaches of the
standardization and localisation can have a massive impact on the actions of the managers in
reference to the specific practices of HR. Proper discussion on the appropriateness of
localization and standardization are required to be identified which can be adopted by the
managers in the companies to improve the overall HR related practices effectively. Moreover,
the reasons are expected to be stated that will help in identifying the difference in the HR
practices in various countries. Lastly, the impact of the local or the organizational culture on
motivation and empowerment of the employees is needed to be identified concerning the
effectiveness of the organization. There are various approaches in HRM that are required to
be followed as it will help in enhancing the overall process of improving the situations.
Appropriateness of Standardization and Localization
Standardization
As commented by Adams, Nyuur, Ellis and Debrah (2017, p.192), the
standardization in the context of human resource management is the global integration of the
parent organization policies along with practices. It refers to the overall level of the central
coordination by the HQ which will be helpful in closely integrating the different operations of
the subsidiaries in the entire worldwide which will be beneficial in achieving the
organizational goals successfully. For instance- There are various Japanese companies such
as Toyota and Canon have followed traditionally the standardization approach that helped
them in bringing overall efficiency in the different activities which are performed by them in
comparison to the other competitors.
On the other hand, the multinational corporation of America IBM has tried to utilize
the relatively standardized practices of the HRM for the different aspects such as recruitment
and training of the various employees and candidates. Moreover, Shin and Konrad (2017,
p.996), have commented that as per the institutional theory along with perspective, there are
significant factors which affect the organizations to follow the standardization aspects which
is inclusive of coercive isomorphism, mimetic isomorphism along with normative
isomorphism. In addition to the same, as commented by Maharjan and Sekiguch (2016, p.
164), the coercive isomorphism of the MNC is the overall influence by the powerful

4
HUMAN RESOURCE MANAGEMENT
constituency which is inclusive of the government norms which have been imposed by them
in a certain pattern, and the organizations are required to follow such standards mandatorily.
However, on the contrary, Geary and Aguzzoli (2016, p.996), have opined that
mimetic isomorphism is the other aspect wherein the different multinational companies are in
such an uncertain situation, and they try to adopt the pattern which is exhibited by the
company in their home country, and it is viewed to be successful in their operations as well.
Lastly, Farndale, Brewster, Ligthart and Poutsma (2015, p.1085), have opined that the
normative isomorphism is the situation wherein the different MNCs are affected by the
various professional companies which act as the disseminators of the appropriate pattern of
the organization in the respective environment.
As commented by authors in Forbes.com (2019), the standardization is the global best
practice which is accepted in the entire worldwide and it is treated as the rational approach
and initiative which is taken by the management by the different MNEs which will be
assisting in transferring the different HRM policies along with practices to the different
international operations with the belief that the operations which are being undertaken under
the respective approach will be successful and provide the best results. The various factors of
the standardization of the IHRM practices are as follows:
 The organizations will eventually adopt the transnational corporate strategy
 The corresponding organizational structure
 will support it
 The shared worldwide corporate culture will reinforce it

Localization
On the other hand, as commented by Edwards, Sanchez-Mangas, Jalette, Lavelle and
Minbaeva (2016, p.1000), the different previous research shows that the national culture
along with the different institutional characteristics has limited the overall transfer of the
practices related to HRM. The transfer of the different HRM related methods to the overseas
subsidiaries is limited in approach, and it might force the different MNCs to localize the
various techniques described to human resource management. As commented by the authors
in Econtentmag.com (2019), the process of localization is the different practices as well as
the various policies of the host countries that are locally differentiated in nature. In the other

5
HUMAN RESOURCE MANAGEMENT
terms, it can be identified that the subsidiary acts and behaves in a local manner and they are
different from the parent country as well.
For instance- The different European organizations such as Nestle and Philips are the
major proponents of the localization. It can be identified that in order to survive in the local
market of India, Nestle has adopted the localisation strategies which helped them in
sustaining in the local market and it helped them in attracting the customers, and it increased
their sales. On the other hand, Walmart and Canon suffer due to low performance in the other
markets, as the main focus of the companies is to follow the parent country perspectives and
due to the same, both the companies have faced severe low performance in the different
countries.
From the above, it can be identified that the two opposing factors such as
standardization and localization are the challenges to the HRM related practices in the
operations of the MNCs. However, the different multinational companies which can strike the
proper balance between the two concepts, they will be able to deliver appropriate and
appropriate performance in the market appropriately without many difficulties.
Implementation of Standardization and Localization Approaches for Managers
As commented by Chung and Furusawa (2016, p.169), the application of
standardization is one of the best approaches which can be adopted by the different
organizations which have their presence in the entire worldwide. From the particular
perspective, it can be identified that the initiative of following the standardization approach
can be seen as the result of the four inter-related difference drivers which will be supporting
the IHRM standardization aspects in the following manner:
 Firstly, the top managers of the organizations need to believe that the current HRM
practices of the various MNCs are superior in all regards and all scenarios
 Secondly, the managers need to believe the fact that coherence between practices
which are necessary for the organizational effectiveness which is the all or none
approach that is required to be considered by the top managers
 Thirdly, the different managers need to be experienced in the internationalisation
approach which will be helpful for them to work in any situation which will be
beneficial for the overall success of the organization

6
HUMAN RESOURCE MANAGEMENT
On the other hand, there are different kinds of aspects in the localization that can
adopted by the organizations which will be beneficial in adapting to the local culture of the
various countries and attract more customers effectively.
 Firstly, the local managers that the local practices of HRM are possible and plausible
and the imposed standardized practices related to MNC will not work in the
respective environment
 Secondly, the ability of the local managers is required to be analyzed to control the
overall access to the global labour market, and the channels of distribution along with
expertise may effectively hinder the efforts of standardization.
 Both the local culture along with political-legal systems can make create few edits in
the practices of the MNCs as per the local culture or policies effectively
Differences Standardization Localization
Differences in Competency It is treated as the best
practice globally
It is treated as the contingent
and local practice
Differences in Consistency There is global consistency
in the different HR related
practices along with
coherence
There is differentiation in
the political-legal system,
and there is enormous
coherence amongst the local
regulations
Differences in Power The MNCs receive distinct
advantages in the
international industry and
market
There is control of the
domestic partner over the
various resources such as
market and distribution
channel and labour and
material
Differences in Experience The MNCs can experience
in the internalising
operations, and the level of
maturity is high
There is the inclusion of
national experience in
negotiating with the
different foreign partners

7
HUMAN RESOURCE MANAGEMENT
Reasons for Differences in HR Practices in Different Countries
The significant distinctions between the different practices related to HRM in various
countries wherein the significant fact which lies are that the domestic HRM is mainly
involved with the different employees within one national boundary (Peoplematters.in, 2019).
However, on the other hand, the IHRM deals with more countries which are inclusive of the
following:
 Parent country wherein the firm is originated along with headquartered
 Host country wherein the subsidiary is located
 Other countries from where the company may source the labour, materials and
research and development related activities
For instance- Woolworths is situated and initially founded in Australia; however they
have their presence in New Zealand and other 995 locations. From the example, it can be
analyzed and identified that Woolworths need to follow the various IHRM activities in
different countries wherein they have their presence to address the different HR related issues
of employees belonging from multiple nationalities (Businessreport.com, 2019). Woolworths
need to follow the policies related to recruitment, selection along with compensation
packages which will suit in the respective country.
From the particular example of Woolworths, it can be identified that the International
Human Resource Management practices are different from domestic HRM practices. The
main reasons for the difference in HRM practices are as follows:
Firstly, in different countries, there can be cross-cultural aspects which are unusual in
various countries, and it can create gaps. The Hofstede Model of the natural culture consists
of six dimensions which can be different in various countries and therefore, the practices
related to HR is required to be different (Hofstedeinsights.com, 2019). From Figure 1, it can
be identified that there are numerous cultural aspects which are different in New Zealand and
Australia and it can create a massive effect on the overall efficiency of the different HRM
related practices.

8
HUMAN RESOURCE MANAGEMENT
Figure 1: Hofstede Model of Cultural Dimension of Australia and New Zealand
(Source: Hofstedeinsights.com, 2019)
Moreover, the strategy related to recruitment of the candidates can be different in
different countries as in one country, there can be the inclusion of equality between men and
women, however in the other country, the men employees are preferred more. In such a
scenario, the different practices related to HRM will be different, and in such a scenario, if
the standardized HRM practices are followed, it will affect the overall situation in the
subsidiaries.
Figure 1: Hofstede Model of Cultural Dimension
(Source: Adams, Nyuur, Ellis & Debrah, 2017, p.193)
Secondly, there can be different diversity issues in various countries that can create a
massive impact on different HRM related practices. It can be seen that there can be the
inclusion of performance-based pay in few countries; however it is a different approach in the
other countries that can create differences in the HR related activities which are being

9
HUMAN RESOURCE MANAGEMENT
followed. For instance- It can be analyzed that Woolworths in Australia prefers to provide
the performance-based pay to the employees who are performing efficiently, however on the
other hand, there can be different situation in New Zealand as the culture of the country does
not prefer the performance-based pay as they feel it is not critical and introducing the same in
New Zealand can affect the overall managerial process.
Lastly, there can be training and compliance issues between the two countries in
which it can be seen that while operating in Australia, Woolworths supermarket can adopt a
separate training method such as on-the-job training aspect which will be beneficial for the
respective country (Adams, Nyuur, Ellis & Debrah, 2017, p.193). There can be differences
in the leadership aspects that can affect the overall growth of the firm in different countries
wherein they have their presence. However, in New Zealand, it can be seen that there can be
an inclusion of the off-the-job training aspects that will be beneficial in improving the
process.
From the above, it can be analyzed and identified that these are the major three
aspects that affect the different human resource related practices in different countries. In
such scenario, the localization approach can be adopted by the companies which have
extended their operations in various other countries as it will be beneficial for adapting to the
culture of the respective country and gain competitiveness in the respective environment.
Impact of Organizational or Local Culture on Empowerment and Motivation of
Employees concerning Organizational Effectiveness
Motivation is one of the critical components of the organizational culture, and the
organizational culture plays a vital role in organizations regarding the analysis of the feelings
of the employees while working in the companies. There are different ways through which
the organisational or the local culture created a significant impact on the motivation and
empowerment of the employees concerning the effectiveness of the organizations. As
commented by Budhwar, Tung, Varma and Do (2017, p.111), the strong culture is one of the
approaches that can be adopted by the companies and it will bring positive energy of the
people as it helps the employees in performing with loyalty and performing tasks in a much
more efficient manner.
Moreover, there is clear and mutual interdependence between the organizational
culture and employees. It is the situation wherein both parties create a significant impact on

10
HUMAN RESOURCE MANAGEMENT
one another, and it helps them in achieving success. Such kind of relation helps in giving
birth to the relationship to the motivation among employees and job satisfaction. The
organizational culture is the vital essence which should be prompted to ensure motivation
among employees as to achieve the organizational goals (Brewster, Chung & Sparrow, 2016).
The training and development procedures vary substantially from one country to the other. In
such a scenario, the companies need to adopt the different aspects which are familiar to
employees in the respective country.
Proper sharing of positive feedback is the other aspect which can help improve the
overall morale of the employees. There should be room to grow for the employees which will
be useful for the organizations to be honest and respectful and it will help gain a competitive
advantage in the market. With the localisation aspect, the culture creates a significant impact
on motivating employees, and it will help improve organizational performance effectively.
Conclusion
Therefore, it can be concluded that standardization and localization play a significant
role in different activities related to human resource management practices. Both the
approaches play a vital role in various organisations; however, the opposing forces of the
localization and standardization are the challenges for the HRM related practices as there are
various processes which are being followed in different countries and it affects the HR
activities as per the cross-cultural aspects. Moreover, it has been noticed that there are
different kinds of reasons for differences in the HR related practices such as cultural,
diversity and political elements that create massive impact on the HR activities and in order
to strike proper balance between the standardization and localization approaches, the
multinational corporations need to keep an appropriate check between the two as to deliver
the best performance in comparison of the other competitors present in the market.

11
HUMAN RESOURCE MANAGEMENT
References
Adams, K., Nyuur, R. B., Ellis, F. Y., & Debrah, Y. A. (2017). South African MNCs' HRM
systems and practices at the subsidiary Level: Insights from subsidiaries in
Ghana. Journal of International Management, 23(2), 180-193.
Brewster, C., Chung, C., & Sparrow, P. (2016). Globalizing human resource management.
Routledge.
Budhwar, P., Tung, R. L., Varma, A., & Do, H. (2017). Developments in human resource
management in MNCs from BRICS nations: A review and future research
agenda. Journal of International Management, 23(2), 111-123.
Chung, C., & Furusawa, M. (2016). 10 The HRM of Foreign MNCs Operating in
Europe. International Human Resource Management: Contemporary HR Issues in
Europe, 169.
Econtentmag.com (2019) The State of Translation and Localization 2019 (online) Retrieved
from http://www.econtentmag.com/Articles/Editorial/Feature/The-State-of-
Translation-and-Localization-2019-129246.htm [Accessed on 24 Mar 2019]
Edwards, T., Sanchez-Mangas, R., Jalette, P., Lavelle, J., & Minbaeva, D. (2016). Global
standardization or national differentiation of HRM practices in multinational
companies? A comparison of multinationals in five countries. Journal of
International Business Studies, 47(8), 997-1021.
Farndale, E., Brewster, C., Ligthart, P., & Poutsma, E. (2017). The effects of market
economy type and foreign MNE subsidiaries on the convergence and divergence of
HRM. Journal of International Business Studies, 48(9), 1065-1086.