International and Domestic Human Resource Management

International and interior(prenominal) human race Resource Management foundation garment serviceman vision way has become an important issue as more than and more firms operating human race(prenominal)ly ar in get to machinate an to a lower placestanding on how to operate militantly in an foreign demarcation environment (Dowling Welch, 2005).As the world(a) playing field has become more competitive, international companies ar forced toadopt efficient HRM and give more focus to their international than their internal operations. Dueto the sensitivity of the issue, the concerned HR must salute the key issues such as the impact of planetaryization, environmental influences, heathenish differences, the domestic HRM policies in differentcountries and the global workforce involved in the action (Armstrong, 2009).The induce of this essay is to provide a clear overview of the main differences and similarities betweenInternational and municipal mankind resourcefulness f ocal point. The essay will to some extent establish thepractice of homosexual resource management in a domestic and international level together with thefactors that affect this process. Finally, a conclusion will be drawn with an analysis of the researchfindings.DEFINITIONS OF DOMESTIC AND INTERNATIONAL HUMAN RESOURCE MANAGMENTWhen we look at the historic development of kind resource management, we find that itevolves from the destination Personnel management. The gradual development of managementactivity from administration of personnel to strategic planning of human resource, has given acompetitive advantage to international companies. Personnel management foc employmentd more onadministrative functions and how to control the employee rather than commit the employee tothe placement strategic planning process. But the present gentle resource management schema is structured more on the commitment of the staff and involves the employee in thestrategic planning and development process of the organization. It also melodic line that organizationsshould consider their employees as assets than variable costs (Armstrong, 2009, Torrington et al,2005). It is not quite easy to provide a precise and exact definition of benignant resourcemanagement repayable to the varying and different activities it refers to. One attempt made by Storey(1995) is HRM is a distinctive approach to employment and management which seeks toachieve competitive advantage through the strategic development of a highly committed andcapable workforce using an array of heathen, structural and personal techniques. On the some otherhand, Human resource management is also defined as representing two activities. One is thegeneric bourn concerned with the key designs of human activity, which are the staffing,performance, intensify management and administrative objectives, and the other activity is theHuman resource approach to carry out the activities stated under the generic term one(Torri ngton et al, 2005).In order to clearly see the commonalities and differences shared by Domestic and Internationalhuman resource management, identifying the activities which change or evolve when HR goesInternational is a vital point. To this install, a module developed by Morgan (1986) is helpful. Themodule presents three marks of International Human resource management with variouscategories of HR activities, countries involved and employees in International activities. The firstdimension deals with the tasks of Human resource management the procurement, allocation andutilization of HR which goes further down to detailed activities mentioned early in this cover underthe generic term explanation for HRM. The second dimension deals with three nation categoriesthe phalanx nation where the subsidiary is located, firm untaught of the caller-ups headquarter, othercountries which are source of manpower, finance and other inputs. The third dimension isconcerned with three categor y of employees Host- demesne nationals, Parent-country nationals andThird-country nationals. Thence, according to Morgan, The interplay between these threedimensions is what define international Human resource management (Dowling Welch, 2005).At this point, it shows that the elements or issues related to International HRM practice are labyrinthian,higher in number and have broader scope than those found in Domestic HRM practice. In order tocope up with these complex issues the management may need to choose a strategy-ethnocentric,Polycentric, regiocentric or geocentric that best fits its air plan. In ethnocentric strategy, acompany uses identical Human resource strategy both at home and in its abroad military control line activity.The polycentric strategy, with embracing the root word that each country is different in every aspect,gives foreign subsidiaries autonomy to employ host country nationals and exercises localappropriate HR practices to the subsidiarys location. Reg iocentric approach is when companies arestructured on a regional basis and best regional practices of HR are prescribed. Lastly, geocentricstrategy holds an open for all employment chance where, all nationals from the HQ, subsidiaryand third country may be employed. It upholds Best person for the job motto and promotes highercompany integrity with less path for nationality (Storey, 2007).In the next section, the paper will discuss if the HR practices at the domestic level can beimplemented at international level and would try to identify the factors that may facilitate orhamper this process in general.THE PRACTICE OF HUMAN RESOURCE MANAGMENT AT DOMESTIC AND INTERNATIONAL directThe increasing business activity at international level has shown the importance of understandinghow Multinational companies can operate efficiently and effectively in the global dimension. Ingeneral, International Human resource management involves the internationalizing company indifferent practices such as diverse HR activities than found in the home country, great involvementin employees private lives, greater risk of exposure to the human and finance involved, moreexternal influence from the host country and greater complexity than found at Domestic HRM level(Dowling Welch, 2005). An International HR manager also needs to address the challenges due tocross cultural differences, global competition, language and political differences when posted atinternational level. Apart from the different intensity level of HR activities and strategic coordinationof different business units, both Domestic and International HRM share akin major activities ofHRM. In addition, an International Human resource manager also needs to understand the degree ofsoft or hard HRM present in the home base and foreign subsidiaries. Companies with Hard HRMpolicy are more business foc apply and apply cost minimisation systems trance companies that engagethe employee in participation have Soft HRM policy (St orey, 2007).Dowling Welch (2005) identified some factors that moderate the difference between Internationaland domestic Human resource management. According to Dowling, these variables are culturalenvironment, the fabrication with which the Multinational is primarily involved, the extent of relianceof the multinationals on its home country or domestic foodstuff and the attitudes of seniormanagement in international operation. Let us discuss to what extent these variables would act asmoderators between Domestic and International HRM practices.INDUSTRY display caseOne important variable that moderates International and Domestic Human resource management isthe type of industry an MNC is involved in and the international competition it faces. set the business playing field in one straight line, let us say we have at one end of thecontinuum a multi-domestic industry and the other end a global industry. The multi-domestic enddesignates an industry operating in various countries but th e completion in that industry type is specific to the country. While at the other end, the global industry base is about an industry thatoperates in different countries but interlinked with other industries in the same congregation (Dowling Welch, 2005).Industries that fall under the multi-domestic structure have a free reign and are not strictlycontrolled by the Headquarter of the MNC. They exhibit a highly change HR structure and playa passive role in the transfer of HR practices outside their boarder. Examples for this category can bedistribution agents and insurance policy companies. The global industry represents a model whereby HRmanagement transfers management practices abroad and these practices are replicated and put inuse by the subsidiaries. Example for this group includes commercial aircraft companies andcomputer manufacturing companies (Dowling Welch, 2004, Beard comfortably Claydon, 2010).CULTUREThe other influential factor in the moderating International and dom estic Human resourcemanagement is culture. (Dowling Welch, 2004)Armstrong (2009) define organization culture as the patterns of values, norms, beliefs, attitudesand assumption that may not have been articulated but shape the way in which the great deal in theorganization work and get things done. (Armstrong, 2009, p384). Hofstede in his part put cultureas the collective programming of the mind which distinguishes the members of one group orcategory of people from other (Hofstede, 2001, p9). other(a) authors also have tried and true to define culture in different ways but in general it is expressed as aprocess present in a social environment which holds the rules and regulations and the judgeednorms on how people are expected to behave. According to Hofstede (2001) there are tail finindependent dimensions of culture that explain the major difference between national groups. Thefirst is power distance. It is the degree to which members of an organization below the leadership ar range accept and expect the unequal distribution of power. High power distance shows an autocraticleadership while low power distance denotes a democratic practice. skepticism dodging refers tothe degree in which the people in a society feel uncomfortable for lack of structure and avoidam intermediate-largeuity. High uncertainty avoidance exist in countries having a strong rules and job scrutiny asthey try to avoid uncertainties and low uncertainty avoidance is registered in countries promotingmore slack and flexible social rules and regulations. Hofstede third dimension is the individualismversus collectivism point. This dimension is concerned with the tendency of peoples response toidentifying themselves either in larger groups or more to themselves. High individualism is scored incountries like the USA where people mostly identify themselves in small family groups while in lowindividualistic countries people prefer to co-habit together and form large social groups. Masculinit yor femininity is the fourth dimension which refers to emotional roles attributed to both genders. Itbalances the tough masculine equity of assertion and aggressiveness with the softer femininevirtue of emotion and caring. Japan scores high on this regard while Norway is the lowest. The fifthdimension is the long term versus short term orientation. This dimension deals with the recognitionof status in a society and perseverance. In general understanding the cultural norms of a foreign country and adapting to the environment would benefit a company in an international level andmore importantly the HR policies of an organization are mostly influenced by the cultural practicesurrounding the organization. Human resource activities like hiring of staff, promoting, rewardingand dismissal of employees are determined and affected by the cultural practice of the host country (Dowling Welch, 2005).There is a school of thought that stresses the concept of Etics and Emics as an important aspe ct tounderstanding culture in different settings. The Etic concept refers to the culture-common aspectwhile the Emic approach deals with culture-specific concepts of behaviour. Understanding thedifference between the two concepts is helpful in cross-cultural business communication. To thiseffect identifying which Human resource activity falls under Etic and which falls under Emic is alsocrucial as it have an effect on the performance of companies outside their home country (Dowling Welch, 2005).As noted earlier Emic refers to practices specific to one culture and are not transferrable acrosscultures and Etic refers to the common practices found in different cultures and are transferrableacross cultures. Other dimensions of culture that may affect Human resource practices are thepolitical condition of the country where MNC operate, its economic rank and development and itslegal position. The Multinational companies need to be careful in countries with strong religiousviews as they ma y have both civil and religious laws in use (Dowling Welch, 2005).RELIANCE OF THE MNC ON ITS HOME COUNTRY DOMESTIC MARKETThe status of the organizations home domestic market is another moderator differentiatingInternational Human resource management and Domestic Human resource management.One major factor pushing companies to go outside their home market is the small market demand intheir home country but also the international market may not be their target market for bigcompanies as they have high demand in their home country. Hence, when analysing companyperformance, focusing only on the international market activity may not give the true stand or rankof an international company. Some international companies originate from small countries withsmall domestic demand or saturated domestic market and play a big role in the internationalbusiness activity. As an example ABB Company from Switzerland, INTERBREW from Belgium and wecan also mention PHILIPS Electronics originating from The Netherlands. United Nations Conferenceon Trade and maturation (UNCTAD) made an annual survey on foreign direct investment and withsome detailed analysis made, it published a list and it reveals that Coca poop and McDonalds areranked 27th and 39th respectively. As stated earlier the main reason for this situation is, these bigMultinational companies have high domestic demand in their home country the USA. This may influence to some extent on their international business practice as well as deprive their managersan international management experience (Dowling Welch, 2004).MANAGEMENT ORIENTATIONThe last moderator presented by Dowling Welch, (2004) is the level of orientation of seniormanagement. Managers from different cultures have different perceptions towards the boilersuitmanagement system of a company. Lack of knowledge of competitive management skill on aninternational level would lead to failure as it may fail to identify and address the issue differentlyfrom the domestic ma nagement issue.Beardwell and Claydon (2000) also observe the significance role Multinational companies play in theworld economy and with regard to the interrelation and restructuring of management issue atinternational versus the national level wrote Management style, Strategies and policies areshaped by home business system -the financial, institutional, legal and political framework inwhich they developed as domestic firms. Thus there is a persistent country of origin effect in thebehaviour of MNCs whereby the country the MNC originates from, exerts a distinctive effect on themanagement style, particularly the management of Human resource. (Beardwell and Claydon,2010, p19)On the other hand Taylor et al (1996) presents the exportive, adaptive and integrative models andexplain why the international companies adopt different form of Strategic International Humanresource management. The adoptive models reflect that Human resource policies are designed tomatch the local environment of the subsidiary. There would be less transfer of Human resourcepractices from the parent company and use differentiation as a priority point. In the exportiveorientation the subsidiary copies Human resource management policies from the parent company.This upholds the integration of global management system and is ethnocentric in nature. Theintegrative orientation model is the selection of best HR practice across the world and is moreliberal and flexible in allowing the subsidiary adopts local HR practices (Beardwell and Claydon,2010). But each orientation requires different consideration in line with the HR policies practiced bythe parent organization. business line INTEGRATION AND GLOBAL STRATEGYAs the global commerce is increasing so has the activities of International Human resourcemanagement becomes an important and more complex than Domestic Human resourcemanagement. While we acknowledge the expanding business activity, there is a school ofthought that support and concur on t he alignment of business practices on global scale. The ideaposits three major perspectives towards the practice of Human resource management,Universalistic, Contingency and Configuration.The Universalistic perspective is about identifying the best standard of Human resource practicethrough various and continuous Human resource activities while the Contingency or externallyfit perspective suggests the need for a mix of different policies and practices to get high resultsor best HR performance. The Configuration perspective stand for the interaction of businessstrategies and HRM practices used to determine business performance (Beardwell and Claydon,2010).Another observation toward the HR practices in the international level says that, organizationsoperating under same environment would be compelled towards a uniform managementpractice. This Isomorphic pull as they refer to it or isomorphism has three forms. Managementpractices under the Coercive form adopt foreign HR practices due t o external pressure, such aspressures or expectations from the state, Legal or cultural environment. The Mimetic form iswhen companies copy HR models from other companies operating on the same line of businessand accept it as the standard form of practice against various uncertainties. The last model is theNormative and it is a pull resulting from the professionalization functions or widely accepted HRpractices (Brewster et al, 2007).In the practical field most organizations have been confronted with the deregulation of themarket, free global trade and also slow business transactions. To this they have been forced toapply uniform and cost minimization strategies and as these international companies apply theprescribed strategies it indirectly put pressure on the host country management system to adopt/copy same management practice (Bratton and Gold, 2003).EXPATRIATESOne important point in International Human resource management is the movement ofemployees across national boundaries to foreign country assignments. These employees aretermed as Expatriates while Employees transferred from subsidiary branch into Headquartersare referred as Inpatriates (Dowling Welch, 2005). As the global business activity ofInternational companies increased, it demanded high controlling system and follow up of thesubsidiaries business performance. To this effect, MNC have chosen the use of Expatriates,Parent company nationals, as a controlling mechanism by assigning them in key managementpositions in the subsidiary branches of the parent company (Bartlett Ghoshal, 1989).The efficiency of the deployed oust may also depend on the adaptability the discharge onhis/her foreign assignment. A study conducted by Mark Mendenhall and Gary Oddor in 1985suggests that expatriate success and version depend on several dimensions. The first is self-oriented dimension, which deals with the expat personal competence and adaptability to theforeign environment. The second dimension is the others -oriented dimension, which consist ofrelationship development and willingness to communicate in role to the reluctance toassimilate and learn the language of the foreign land. The Third dimension is the perceptualdimension, which is concerned with the ability of expatriates to comprehend the behaviour offoreign nationals and the fourth dimension is cultural toughness and this is to gauge how quicklyan expatriate adapts to a harsh environment (Brewster Harris1999). Apart from parentcountry nationals, Nationals from host country and third country are also considered asexpatriates. But this paper will focus only on expatriates from parent country nationals todiscuss the main reasons as to why an MNC send an employee on a foreign assignment.Expatriates are assigned in a foreign country as,An agent of direct control- The assigned expatriate is used to control the activities of the subsidiary and ensure its compliance through supervision (Dowling Welch, 2005, Bartlett Ghoshal , 1989)A n agent of socialization- The expatriate in question understands the companies values and beliefs and acts as a medium to transfer these qualities of the parent company to the subsidiaries (Dowling Welch, 2005)As network builder- An expatriate having a knowledge given(p) to his/her job qualification will in due take to the woods bond with people in different key positions and together build a network of interdependence (Dowling Welch, 2005)As boundary spanner- This refers to activities performed by the expatriate, such as filling information that bridge internal and external organizational context. It would be the expatriates duty to promote the company profile as well as gather information that may be of use to the betterment of the company (Dowling Welch, 2005)As language nodes- Expatriates with foreign language background would eventually become an asset particularly when they repatriate to their home country (Dowling Welch, 2005).The advantages of using expatriates are m ainly to maintain organizational control, internationalwork experience and follow up the fulfilment of the companys objective by the subsidiary.Whereas the disadvantage points are the problem with the adaptability of expatriates to theforeign environment and the high cost incurred by the parent company to the selection andtraining of expatriates (Dowling Welch, 2005). The process of selecting the right(a) person to theright position is crucial to the success of the oversees mission and it is to noted that anexpatriates success in one environment does not imply that the same expatriate will fill gaps inall circumstances (Brewster Harris, 1999).To this end, In order to select an expatriate for an international assignment, Dowling Welch(2005) have set six basic factors which may assist managers in the process. As individual factorsthey have set Technical ability, cross cultural suitability and family requirements are listedessential while in as situational factors country or cultur al requirements, language and MNErequirements need to be analysed and considered in the selection process. In anotherperspective Schneider and Barsoux (1997) list nine point they see are important for theselection process. They are interpersonal skill, linguistic ability, ability to tolerance and cope upwith uncertainty, motivation to work and live abroad, flexibility, patience and respect, culturalempathy, strong sense of self and sense of humour. (Dowling Welch, 2005)In general the extent of the selection criteria is wide and companies need to identify and consider the most important and pertinent points to the position to be filled.CONCLUSIONThere are various factors that differentiate International Human resource management fromDomestic human resource management. The globalisation of world economies has forcedinternational companies to adjust and continuously change their company strategy and Humanmanagement systems in order to survive the competition. To this, the function o f Humanresource management has become an important subject as it has proved to be a vital point tothe success of International as well as Domestic companies. In this paper various perspectivestowards International Human resource management are discussed briefly. Authors in the fieldare also quoted on how the present and future shape of Human resource management is andwould be. In summary, the paper has tried to identify the main similarities and differencesbetween International and Domestic Human resource management. From the literature reviewpresented, different internal and external factors are discussed to the complexity ofInternational human resource management, presented the various interpretation of HRM andhave tried to show how management and the market would dictate the shape of Humanresource management in general.