Critically Evaluate the Role that Effective HRM Plays Performance of International Firms (GC01882)

Table of Contents

1.0 Introduction.

2.0 International perspective.

3.0 Staffing strategy as part of international HRM.

Ethnocentric approach.

Polycentric approach.

Geocentric approach.

Regiocentric approach.

4.0 Role of HRM in determining and enhancing the organizational performance of international firms

4.1 Performance management

4.2 Performance appraisal

4.3 Implication of performance management

Enhance innovation performance.

Improve environmental performance.

Talent Management

Knowledge Management

4.4 Staff training and development

4.5 Increase staff retention.

4.6 Role of HRM in leadership development

4.7 Improve equality and diversity.

Conclusion.

References.

 

1.0 Introduction

To fulfill the organizational aims and objectives companies need to unify the interest of workers and employees (Chand, 2016). For multinational companies, it is very essential to conduct personal planning and make for staffing management. Therefore, while making personal and staffing plans it is important to make them by concentrating on the companies’ goals and objectives (Mullins, 2015). In this paper, in the first section, the international concept of “HRM” is described. Then in the second section, the alternating roles of HRM on the prospect of international companies are critically analyzed and evaluated.

2.0 International perspective

Usually, the principal activities of HRM are selecting staff and recruiting them, making staffing strategies and staffing, arranging training sessions, making many incentive and reward plans to motivate the workers, management of the performance etc. (Mullins, 2015). Nevertheless, on the prospect of the international market, HRM needs to cover a broader field which involves the interest of host authority, re-allotment and adjustment, taxation, service of executive and language translation (Torrington et al., 2014). The reason behind covering these areas is these affairs vary from nation to nation. For example, India’s taxation system is different from the UK, a developed country. Bratton and Gold (2014) stated that international HRM concentration is mainly on visa affairs, cultural diversity and public benefit and interests. Gunningle and Morley (2016) suggested that global HRM’s focus lies on economic variations, political affairs, social and cultural affairs, legal affairs and ethical issues of different nations. On the other hand, regional HRM does have to give that importance to these issues of their own nation.

Thomson (2015) stated that regional HRM encounters fewer challenges than international HRM as international HRM has to deal with various issues like cultural issues, political issues, issues related to traveling and re-allotment, issues related to damage of the business and status loss in the different countries etc. Domestic HRM does not need to be concerned about these factors. International HRM also needs to encounters trouble from international terrorism, political uncertainty and global environmental affairs which regional HRM does not need to worry about. This means according to PESTLE analysis, the external environment impacts the international HRM activities more than the local HRM performances. For example, international companies face more labor costs in the UK than in India, a developing country. To distinguish global HRM from local HRM David et al. (2014) determined five variables. They are given below in the form of a diagram:

The five variables determined by David et al. (2014) are attitudes of management, complexities and challenges in the international markets, cultural affairs, dependency of international companies’ domestic companies, and the type of industry where the business operates. According to Boxall et al. (2014), the key reason for the difference among the international and regional HRM is the worker of local HRM are the people of own nationality of the host company. However, in the international HRM workers of many ethnicity, cultures, language, religion and different nationalities work together. Mullins (2015) noted that the performance level of HRM of different nations also varies. The reason behind this is the organizational cultures and HR role and competency, selecting staffs and recruiting them, making of staffing strategies and staffing, arranging training sessions, making many incentives and reward plan to motivate the workers, management of the performance etc. varies from country to country.

Wetfeet (2013) stated that international HRM also differs from the domestic market depending on the kind of industry. For example, Companies like Apple or Coca-Cola are more specialists in handling HRM than the domestic small companies as they have to deal with larger staff numbers who come from different backgrounds. On the other hand, the regional companies deal with a small number of local staff who almost share the same background. Following the statement of Morgan (1986) cited in Mullins (2015), there are three issues that only international HRM encounters but domestic HRM do not face. They are staff types, HRM performance, and the country’s operation.

According to the diagram above the principal functions of HR of regional companies are procurements, allocation, and utilization. However, international organizations like Apple or Coca-Cola need to deal with broader prospects of HRM affairs. Therefore, Mullins (2015) recommends that international companies like Apple or Coca-Cola need to be more strategic and radical in HRM practice in the international market.

3.0 Staffing strategy as part of international HRM

The staffing strategies are categorized into four types by Advaitha (2016). They are ethnocentric staffing, polycentric staffing, egocentric staffing, and geocentric staffing.

Ethnocentric approach

Advaitha (2016) stated that an ethnocentric staffing strategy is most appropriate for international companies. Under this strategy, multinational companies occupy their foreign positions by employing deported workers from the parent nations. The key benefit of this strategy is workers or staff that come from the parent companies are more interested and give better performance in the headquarter of the company (Weightman, 2015)………………………..

 

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