by HR in MNCs
HRM is a strategic function concerned with recruitment, training and development, performance appraisal, communication and labor relations. HR policies guide the various functions of HRM. The need for a particular type of HRM is determined by the need for standardization or adaptation. Managing human resources in an international context is more complex than in a domestic set up because of the many differences between headquarters and the subsidiaries. The HR policies of certain companies seem to discriminate on the basis of religion, race, caste, sex or nationality. Companies like Ford and Volvo, however, strive to maintain equality in work and pay.
Staffing is an important aspect of HRM. The staffing policies of MNCs are determined by their approach to globalization. MNCs with an ethnocentric approach fill all top management positions with home country nationals to ensure that home country practices are replicated in subsidiaries. Companies that adopt a polycentric approach to globalization, fill all senior management positions with local nationals to ensure maximum adaptation to local conditions. Companies that adopt a geocentric approach to globalization, identify managers irrespective of their nationality for various international assignments to ensure that best practices are identified and replicated in all the units of the organization. Managers belonging to a particular country and working in another country are called expatriates. The selection, training, period of stay abroad, compensation and repatriation of expatriates are delicate issues that have to be managed by the HR department. On their repatriation, they must be provided suitable challenging assignments that give them the autonomy they have become accustomed to. Since maintaining expatriate managers is expensive, a company must develop local talent.
Companies can identify and develop local talent through in-house Management Development Programs (MDP). These programs will help improve the coordination between employees with diverse cultural, religious and educational backgrounds. Performance appraisal is another activity where there can be differences of opinion between headquarters and subsidiaries.
Subsidiary managers must be involved in setting of unambiguous targets and the establishment of criteria for measuring performance. Performance Management attempts to link performance appraisal to employee training and development, and possibly to compensation. There are three theories concerning the autonomy of subsidiaries in decision-making.
They are: limited autonomy, variable autonomy and negotiated autonomy. According to the theory of limited autonomy, the degree of autonomy will depend on the MNC’s approach to globalization. The theory of variable autonomy states that the degree of autonomy varies with the degree of internationalization of the company.
Companies that adopt an export strategy can afford to have centralized decision-making, whereas strategic business units (SBUs) will require decentralized decision-making. According to the theory of negotiated autonomy, the degree of autonomy of a subsidiary will depend on its ability to negotiate with headquarters.
HRM plays an important role in maintaining harmonious industrial relations. Companies are often intimidated by the strength of the union and the political support it enjoys. Certain companies like Volvo ensure cordial relations with the labor union by actively participating in their development. But certain other companies, like Bata have had frequent labor relations problems in India.
Roles & responsibilities are as follows:
Professional Development: Building up the employees professionally by enrolling them into conferences, seminars etc.
Training: To help new hires get acquainted with the company and also the company to get to know their employee well.
Appraisals: HR work just don’t stop at hiring employees but also their timely performance analysis and promotion appraisals. HR also needs to motivate their employees.
Resolving Conflicts: The HR should be available at the disposal of the conflicting parties and hear out their issues without being judgmental.
Maintaining Work Culture: It’s the one the most important responsibility of the HR that is to maintain a healthy and happy environment within the company. The company employees should be able to freely communicate and voice their opinions in the professional yet happy environment.
ome of the most common challenges multinational companies are facing in terms of HR management include:
Cultural Divide: Main goal of HR management in multinational companies is to build global employee community with unique company culture and values. This can be tricky because diverse languages, cultures and customs can hinder the alignment of HR policies in different company branches.
HR Disconnect: Multinational companies need to implement the same policies and procedures on recruiting, hiring, benefits and compensation in all of their branches and business units across the globe.
Legal compliance: Every country has its own labor law and HR department of each foreign subsidiary needs to fully align company policies with it.
Industrial Relations in MNCs
Managing human resources effectively in companies that do business globally requires cultural awareness and the ability to respond quickly in dynamic environments. Human resource professionals typically handle the recruiting, interviewing, hiring, training and developing of employees that businesses need to achieve their business goals.
They also establish the policies and procedures designed to ensure a fair, safe and productive work facility. Managing individuals in international settings requires motivating and inspiring employees to work collaboratively, even when they don’t reside in the same location.
Fostering Global Collaboration
As companies become more international, human resource professionals have become more generalist. They tend to know less about day-to-day, internal operations and focus more on ensuring personnel work effectively together as teams. They care about competitive advantage, profitability and economic survival during tough financial times.
Their role may have been restricted to hiring employees, managing benefits and handling disciplinary action in the past, but human resource professionals now deal with controlling health care costs, reducing employee attrition and participating in the community, as well.
One major difference between domestic and international HRM is the need to address different countries’ labor laws. Another is to be sensitive to cultural issues that might not seem like a big deal to workers in one country, but might easily offend employees in another.
Working with Managers
Years ago, human resource professionals in traditional small business settings focused on completing administrative tasks, such as recruiting and hiring personnel, often without input from department managers.
As companies become more global, human resource professionals act as business partners to interview and orient new employees to the workplace. A complex business operation typically requires specialized personnel, so human resource professionals must work cooperatively with managers on the production lines.
Providing Ongoing Training
Human resource professionals working for multinational companies can maintain a productive environment by ensuring that an internationally diverse employee pool has the skills and knowledge to work together, explains Strategy + Business magazine. They make arrangements for training courses that enable employees to get the proper credentials for performing their function. This also ensures that companies adhere to all government regulations.
For example, all companies must be certain that employees follow the standards for that assure a safe and healthy workplace setting. In Europe, work councils composed of both employers and employees might mandate training not covered by other trade union agreements.
Building and Managing Teams
Human resource professionals who support international business operations typically must to ensure that diverse teams work well together, explains the Society for Human Resource Management. By conducting team-building workshops, promoting acceptance of cultural diversity and motivating employees to achieve strategic goals, they help their company build strong teams.
By recognizing that in some countries individual recognition plays a larger role than others, human resource professionals can create awareness about how teams can function effectively across borders to maintain company profitability.
