by Comparative Human Resource Management, on the other hand, is a systematic method of investigation that seeks to explain the patterns and variations encountered in cross-national HRM rather than simply describe HRM institutions and practices in different societies. Different national business systems arise from differences in specific historical, cultural and institutional heritage in certain countries. Comparative differences occur due to decisive historical events such as the process of industrialization or due to the legacy of pre-modern forms of social organisation. Hofstede adopted the ‘culturalist’ perspective where he argued that national business styles emerge due to ingrained cultural attitudes and mental schemas. He described culture under five dimensions which are power distance, individualism, masculinity, uncertainty avoidance and long-term orientation.
Comparative Human Resource Management focuses on specific countries, areas within the country, or different regions of the world. Countries usually possess different political and economic systems, employment, education laws, labour markets, as well as cultural expectations; therefore, all these issues should be taken into account to apply HRM policies and systems.
In spite of globalization, different countries have different human resource policies in place that regulate the way firms manage their human resources. In addition, people from different regions have different cultures and beliefs and values that must be incorporated into the management of human resources in multinational corporations.
Human Resource Management policies and practices are becoming universal and that country-of-origin effects are no longer relevant. The pressure to build standardized operations internationally is strongest in sectors where competition is highly internationalized and where firms compete on the basis of a similar product or service across countries such as in cars and fast foods. They have put forward several reasons to explain this trend. Firstly, all MNCs operate in one global market and therefore have to respond to the same environmental pressures such as globalization and technology, the growth in international trade and the move towards an internationally-integrated financial system. Secondly, the widespread practice of benchmarking ‘best practice’ in terms of cost, quality and productivity may also have contributed to convergence of international HRM models for e.g. Japanese style ‘lean-production’ system in the 1980s and 1990s. Moreover, these pressures towards convergence stem in part from the influence of MNCs themselves through their ability to transfer practices across borders and erode country-of-origin effects. Finally, the formation and development of like-minded international cadres mostly from American or European business schools may have contributed to homogenized international HRM policies and practices.
Since the early 1990s, the international HRM literature has been dominated by models and typologies aimed at identifying how international HR fits with organisational strategy. The main issue for all multinational companies is the need to trade-off the advantages global efficiency namely the coordination of its operations to achieve economies of scale and scope as opposed to the need to differentiate its products and services to meet the local demands. They also identified a third pressure, namely worldwide innovation and learning, whereby firms are encouraged to support innovation and learning across their network of subsidiaries rather than simply relying on research and development at the headquarters. MNEs then follow the appropriate HRM policies and practices according to the structure of the organisation, the competitive strategy chosen or stage of corporate evolution reached. Taylor’s model of strategic international HRM has been described below.
Exportive: This is essentially a model where the HQ management takes home country management approach and try to implement them in their foreign subsidiaries in order to achieve economies of scale. In this model, there is a system of hierarchy and a centralized control. This is especially useful in instances of uncertain political environment and high risks demanding greater control from corporate parents. Given this pattern of centralization, there is a considerable amount of ‘forward policy transfer’ and less ‘reverse transfer from subsidiaries to the HQ, i.e. they rely mainly on the technical know-how of the parent company. Global firms offer products or services that are standardized to enable production to be carried in a cost-efficient way. Their subsidiaries are not subject to rigid control except over the quality and the presentation of the product or service. This structure is normally associated with the American firms with their formalized, bureaucratic control and a dominant finance system to internalize risks.
Adaptive: Differences in the host environment demands and conditions mean that overseas subsidiaries have to operate independently. This is common where departing from established practices in host environments is unlawful. For example, in some Germany, there is a legal obligation to negotiate with employee representatives concerning major organisational changes. In other cases, transferring practices may be legal but would go against traditional practices at the risk of losing goodwill from staff. Firms may decide to forgo HQ control if there is the possibility to exploit most efficiently the local labor markers. For example, MNCs which origin from high-cost highly regulated economies such as Germany may well choose not to transfer important elements of their HR systems such as collective bargaining or apprenticeship if they move to lower wage, lightly regulated economies such as China.
Integrative: It is also argued that the more management processes and activities can be integrated across geographical boundaries, the easier it is to share resources and knowledge. They can identify and best use the skill and management talent that exists across the MNC network allowing for both global integration and local differentiation.
As mentioned previously, international HRM processes consist of the same activities as domestic HRM but applied in an international context. These include an accurate human resource planning to ensure that the MNCs have the right people at the right place around the world, good staffing policies that capitalise on the world-wide expertise of expatriates and locals, performance appraisals that fit with the competitive strategies of the HQ, adequate training and development to ensure that expatriates do not suffer from “Culture shock” and compensation policies that are strategically and culturally relevant. The focus in international HRM strategy is how MNEs coordinate their geographically dispersed operations strengthening the organisational culture, promoting commitment and encouraging willingness in employees to act in the interests of the firm.
Related Issues of Comparative and IHRM to Globalization
Performance
Globalization encourages global operations of an organization. The ability of an organization to operate on a global scale means that there are many firms operating in the same market and industry. As the firm operates at the global level, the common performance of employees and the organization in general is of great importance.
This is because the firm is operating at a higher level in markets characterised by free entry and exit. In order to sustain its existence in the market, the organization needs to maintain its performance.
This calls for high performance from the employees of the firm. It is the duty of the international HRM to adopt policies that maximize the performance of employees such as good compensation and motivation policies.
Working Conditions
The environment in which employees of a multinational corporation work is very important for the performance of the firm. Employees require good working conditions including a good management that is characterised by good leadership skills.
Although different organizations apply different leadership styles, it is important that transformational leadership and other inspirational leadership be applied to motivate employees to perform.
Both IHRM and CHRM concur that a good working environment characterised by high levels of communication and teamwork could helps employees gain high levels of autonomy, learning and excellence thereby improving their performance.
Technology
Advanced technology is an outcome of globalization. Many firms are utilizing technology to establish a competitive advantage either in reducing costs, marketing, improving manufacturing processes or for doing business via channels such as e-commerce and e-business.
Management of diverse human resources calls for has applied technology as different applications are used to develop employee databases for organizations. Due to technology, multinational organizations operating in different countries and regions are able to management their human resources from a central location.
Irrespective of the background, employees are required to use different devices and appliances used to perform different tasks in organizations. Human resource management in companies operating in different countries do train their employees in order to upgrade the system and technology.
Labour Relations and Laws
Both Comparative and international human resource management for firms operating in the global business environment are required by the international labour organization to adhere to international labour regulations regarding hiring and treating of employees.
Additionally, the regulations in the countries of operation are required to reflect the internationally accepted labour regulations. Comparative HRM adheres to cultural elements while observing international and country employment regulations, which is similar to the international human resource management.
Strategy
Strategy is important to both International and Comparative HRM. Both firms of managing human resources perceive the global business environment as being dynamic and characterized by uncertainty.
Therefore, human resource management should involve the aspect of strategic human resource management that incorporates different strategies that could help a multinational organization maintain its competitiveness in an uncertain environment.
Due to this, many organizations operating in many countries across different countries incorporate different strategies that are in line with the strategies of the organization in order to maintain competitiveness.
