As more organizations expand across borders and have easy access to the global marketplace, there are opportunities and problems that come with functioning at such levels. As the international and cross-cultural aspects of business become more prevalent, most organizations profit greatly from the diversity of knowledge as well as varied and novel approaches to business challenges. Even though there are advantages to internalization,the businesses also face challenges in regards to the culture and international business. One of the departments that are affected by internationalization is the human resource department. While striving to come up with the best staff selection and assessment approaches, the human resource department encounters several challenges (Schuler, Tarique and Jackson, 2004).
Culture plays a critical role in regards to the determination of the human resource policies and practices that are adopted in any organization (Schuler, Tarique and Jackson, 2004). Human resources are known to be a factor of the different biological inheritance and the interactions that arise with the environment. The family background, the socio-cultural environment, educational accomplishment and the climate of an organization affects the attitude, behavior, and performance of human beings. The human resource practices vary from one country to another due to the differences in cultural beliefs and values. The work culture of the organizations also differs depending on the cultural differences.
The first challenge concerns the adaptation, hiring and retention strategies that can suit the diverse workforce. Owing to the reduction in the youth population in developed countries and the high youth unemployment in developing countries, the result is skills shortages. The shortages are filled by older workers, more women and also some individuals who come in due to cross-border migration (Collings, Scullion and Morley, 2007). Demography and cultural diversity will progressively define the global arena for the work force as more companies seek to meet the rising shortages, increasingly fain the market efficiencies and ultimately work to acquire strategic assets (Collings, Scullion and Morley, 2007).
Owing to the internationalization, the HR faces the challenge of differing management and work styles depending on the individual cultures (Schuler, Tarique and Jackson, 2004). The challenge, in this case, is the identification of the right job roles, incentives and the different retraining opportunities for every worker while ensuring that there are no age-discrimination practices.
The HR departments are putting up various measures to curb the gender parity in recruitment and selection but still faced with several challenges. One of the challenges is to properly understand how to attract women into the workforce while providing parity.
The other challenges that are concerned when selection the prospective candidates is to understand the differences that are in the education system which is likely to result in selection process differences. For instance, in Germany, a college graduate is likely to come to the job market when 28 years of age while the British college graduates are likely to get to job market at 22 years of age. Additionally, the value system of every other individual differs due to the education system and the beliefs held by the society. These cultural differences affect the manner in which recruitment and selection practices are carried out as well as the path through which it has to be achieved. Therefore, without the HR understanding the culture of the country before commencing the recruitment and selection process then there are high chances of misunderstanding that may arise.
Technology Challenges
As firms seek to internationalize, they face different technology challenges. One of the contributors to the challenges includes the level of technology absorption which is largely affected by the technological development of a country. Technology is known to have changed the manner in which business is transacted globally (Noe et al., 2006). The advent of computers and internet has even ensured more impact on the business practices. Some of the business cannot even function without application of computer technology and the effect is seen in nearly all areas of business which include the human resources.
The level of technology absorption differs from one country to another. There are countries where technology use is high hence allowing for recruitment to be carried out through the internet. However, there are some countries that the technology absorption remains so low that the HR recruiters have to rely on print publications such as newspapers to have their job postings and get the prospect for open positions. This means that if the HR department is not aware of the differences that are eminent then they are likely to miss their target group for recruitment. For the countries with high internet absorption, the HR finds it easy to post jobs and many to access through the online platform. Interestingly, the converse is the situation for job postings that are done through publications and the news prints. Technology has made recruitment process more efficient but there is need to understand the nature of recruits being targeted.
Economic Challenges
When recruiting and selecting the qualified candidates for a job, there are numerous economic challenges that most of the organizations go through. The first economic challenge is tied to the quality of the suitable candidate. The quality of the candidate is always an issue especially in the changing economy where there is the adoption of new technologies, increased awareness of the global economics and where there is an increase in demand for educational requirements (Cascio, 1986). The most prospective candidates are often taken up and it takes a lot of effort to convince them. This means that the pay package has to be considerate enough. In fact, if the hiring company is not aware of the lucrative nature of the best candidates, they may end up losing them to other jobs. This means that the hiring company has to start afresh the process of getting a very suitable candidate who can take up the job. This means that more cost incurred and effectively can lead to less even low-quality individuals being taken up for the job.
Whenever one is selecting and recruiting individuals, the compensation, the benefits and the work environment matter. In cases where the human resources are internationalized, there are additional costs that are incurred in regards to the payments of the staff. The payments have to at best reflect the standards of international payments and at worst reflect the standard payments for the same jobs in the host country. This then means that if the firm was paying what is below the standards of the host country then it will have to adjust according to the pay schedules. Without adjusting they are likely not to attract the required labor force. However, when a company gets itself in the situation of the tough economy, it will have to cut back the benefits and hence miss out on the best candidates. However, when the company adjusts despite the tough economic climate in the country then it will incur the additional costs.
The other economic challenge for most of the business that internationalizes is the cost of employee retention. There is a cost that is incurred to retain employee and it includes offering the best work environments to ensure that the employees do not leave their jobs in search of greener pastures. Additionally, the corporate culture, as well as the work environment, play a critical role in the retention process. Therefore, there is no need to compromise on the two. In fact, when the benefits package is not excellent then the employees are likely to leave as soon as they seek to get better offers. This means that at the international level, the company has to be ready to properly screen the employees hence ensuring that there is loyalty and at the end determining if the employees are likely to leave. There is an additional cost that comes up with a screening of persons and the company has to ensure that this is met. In fact, the company has to get competent persons to help in salvaging the situation.
Strategies
Polycentric Approach-Cross Culture Challenge
To help curb the challenges that arise from the cross cultures, there is a need for the human resource department to use the polycentric approach. In polycentric approach, the HR recruits the persons for the international businesses (Sebastian, 2007). In this case, the persons from the host countries are recruited to take up the managerial positions and helps in carrying out the different activities of the subsidiary company. The reason behind having this kind of approach is because the locals are well acquainted with their culture. Thus, the locals can run businesses in an effective way in comparison to their foreign counterparts. The approach is much more useful and widely applied as the difficulty that arises from the adjustment of expatriates from the parent country gets eliminated (Collings and Scullion, 2006).
Ethnocentric Approach- Technological Challenges
To address the technological challenges that arise in the organization, there is need to hire individuals at the management level same as that of the parent company. Given that technology is a critical issue, the hiring of individuals from the parent country of the company is likely to help in controlling the manner in which systems are set up. This is preferred as the employees from the parent company always have strong working knowledge of the different policies and procedures of the company and ensure that all the guidelines are adhered to (Mayrhofer and Brewster, 1996).
Technological problems can be addressed when there is some form of uniformity or continuity and this is what the ethnocentric approach provides. Usually, when a company opens an office abroad, it is usually in the growth stage. This means that using the ethnocentric staffing can only lead to prevention of expansion of the country’s interest in things that do not matter. Technological continuity is achieved through this approach as people are put in charge of the host country (Dörrenbächer and Geppert, 2010). The people are those who are knowledgeable on the parent company’s goals in the long run.
Polycentric Approach- Economic Challenge
Using the approach will also help in addressing some of the economic challenges. Through the approach, the hiring of locals or the nationals of the host country becomes at least less expensive (Collings and Scullion, 2006). Also, the hiring of individuals within the local market is likely to ensure that there is better government support hence the reduction in costs that are to be incurred in case no local is hired. For some countries, incentives are given to the companies that hire locals.
Bibliography
Cascio, W.F., 1986. Managing human resources. New York, NY: McGraw-Hill.
Collings, D.G. and Scullion, H.U.G.H., 2006. Approaches to international staffing (pp. 17-38). London: Routledge.
Collings, D.G., Scullion, H. and Morley, M.J., 2007. Changing patterns of global staffing in the multinational enterprise: Challenges to the conventional expatriate assignment and emerging alternatives. Journal of World Business, 42(2), pp.198-213.
Dörrenbächer, C. and Geppert, M., 2010. Subsidiary staffing and initiative-taking in multinational corporations: A socio-political perspective. Personnel Review, 39(5), pp.600-621.
Mayrhofer, W. and Brewster, C., 1996. In praise of ethnocentricity: Expatriate policies in European multinationals. Thunderbird International Business Review, 38(6), pp.749-778.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2006. Human resource management: Gaining a competitive advantage.
Schuler, R.S., Tarique, I. and Jackson, S.E., 2004. Managing human resources in cross-border alliances. In Advances in mergers and acquisitions (pp. 103-129). Emerald Group Publishing Limited.
Sebastian Reiche, B., 2007. The effect of international staffing practices on subsidiary staff retention in multinational corporations. The International Journal of Human Resource Management, 18(4), pp.523-536.
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