Human Resources in the Global Market

by: Johannes Bauernberger

Table of Content

1. EXECUTIVE SUMMAR 3

2. STRATEGIC HUMAN RESOURCE MANAGEMENT AND THE INTERNATIONAL MARKETS 5

2.1 Introduction  5
2.2 International Human Resource Management 5
2.3 The importance of HRM for firms operating in international markets 6

3. RECRUITMENT AND SELECTION 8

3.1 Expatriate failure 8
3.2 Factors in expatriate selection  9

4. TRAINING AND DEVELOPMENT  11

4.1 Definition and overview of traditional training and development 11
4.2 The effect of Globalisation on Human Resource Management  12
4.3 Training and development and international assignments  12

5. WORKPLACE CONFLICT AND NEGOTIATIONS  14

5.1 Classifications of conflict and conflict management  14
5.2 How to handle conflict / picking the right style 15

6. PERFORMANCE MANAGEMENT IN INTERNATIONAL HRM 17

6.1 Multinational Performance Management 17
6.2 International employees and Performance Management  18
6.3 Performance appraisal of international employees 20
6.4 Appraisal of HCN employees 21

7. INDUSTRIAL RELATIONS AND EMPLOYMENT LAW 22

7.1 International Industrial Relation 22
7.2 Collective Bargaining 23
7.3 Industrial Relation History 23
7.4 International Human Resource Management Strategies for entering into the Global Market 24

8. REFERENCES 26

1. Executive Summary

The aim of this paper is to point out the increasing importance of Human Resource Management especially from internationally operating companies’ point of view. Furthermore, it will be pointed out what International Human Resource Management is and why it is necessary for Multi National Companies (MNCs) to concern about this topic. In addition, challenges and requirements of HRM will be illustrated and highlighted. This work will furthermore portray the recruitment and selection process as well as the necessity of training and development within global companies. It will describe the workplace conflict and deal with subjects such as industrial relations and employment law. Recruitment and selection in International Human Resource Management is crucial; finding the right people to fill key positions can determine a company’s international operation. Furthermore, it is extremely costly for the company if the expatriate fails. The performance of an expatriate is often determined by factors like (in)ability to adjust to foreign culture, the length of the assignment, willingness to move and work-related factors. What should be considered when selecting an expatriate are therefore criteria like technical ability, crosscultural suitability, family requirements, country requirements as well as language and company requirements. However, recruitment and selection are only the first step for international Human Resource Management.

Training can be defined as the process of teaching new or present employees the basic skills they need to perform their jobs. Development covers two different perspectives: management development, i.e. any attempt made by a company to improve their current or future management performance by imparting knowledge and organizational development, which can be seen as a way to increase the stock of knowledge, skills and abilities within the organisation.

When one deals with International Human Resource Management, international assignments are seen as the main way of improving management and organizational development as there is a need for the company to train the staff selected to perform the international assignment. When training their staff for international assignments, every company should be aware that the training period should enhance and focus mainly on cultural awareness, as the lack of it is the main reason for the failure of such assignments.
Conflict presents a major challenge for the International Human Resource Manager. It is crucial that conflicts are managed in such a way that the organisation as a whole can benefit of its resolution. This requires that managers attempt to solve these problems from a macropoint of view and that they are able to identify the right problem before they attempt to solve it. After the manager has identified the causes and origins of the conflict between parties s/he has 5 styles at his/her disposal to solve it. The selection of these styles depends on the situation and the point of view of the manager. Ultimately, the IHR manager tries to create an atmosphere where employees can function optimally and effectively.

Performance management emphasizes the communication of organizational goals by integrating them into departmental and, individual-level goals. Conflicts on the international level might arise when evaluating the different targets and not consider the diverse circumstance variables as the understanding of quality, the political environment or the absence of ‘face-to-face’ contacts. For expatriate managers a cross-cultural training should be provided and the support from headquarters guaranteed. For performance appraisal (a practice used to evaluate an individual employee′s past performance) in the international context, the combined use of hard, soft and contextual goals is suggested.

International Industrial Relations are a very important component to International Human Resource Management. This is due to the fact that Industrial Relations are the law behind the main function of Human Resource Management. Industrial Relations are the legal aspect of employing and maintaining an employee or employer. It dictates what an organization can or can not do when employing an employee, maintaining an employee and how to fire an employee. It deals with the contracts, hours, wages, bonuses, terms and conditions. Therefore, for an organization to successfully enter into the global market it is imperative that an organization has a human resource department to ensure that the organization abides by and implements and differences in the legislation of employment law to ensure that they do not get into trouble with the employees, law and commission.

2. Strategic Human Resource Management and the International Markets

2.1 Introduction

Today people, employees, are the most valuable asset for a majority of companies. It is not the machinery or computers, but people and knowledge that create competitive advantages. Markets are global and competitive and the number of companies doing business abroad increases every day. So does the need for international Human Resource Management. While on the one hand, technological improvements in some industries increase the threat for workers that their human working power becomes replaced by new and effectively working machines, the far-reaching and non-stoppable rise of the Information and Communication Technology requires well educated and developed labour on a large scale all over the world. Therefore, the level of interest in International Human Resource Management issues has risen remarkable during the past decades. The increasing need of globally acting companies for high qualified working power is furthermore demonstrated by the improvement of the spread of international business. “According to the United Nations Conference on Trade and Development there were 65.000 multinational operating companies with 850.000 subsidiaries worldwide in 2003”¹.

2.2 International Human Resource Management

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1 Dowling, P. and Welch D., International HRM, 2004, p. ix)