Impact Of Globalization On HRM
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During earlier times, business was only concentrated to the meaning i.e. exchange of goods and services. With the time different advancements took place in business and simultaneously addition of a number of other channels in it has given rise to evolution of different sections for development of business management (Andrews, 2013). Human resource management is referred to as management of a company’s human resource or work force. The respective management is responsible for selection, recruitment, training, evaluation and incentive to employees. Earlier human resource was concentrated to all above functions but later was influenced by globalization. The globalization concept emphasize on increase in transfer of products and services across national boundaries and evolution of corresponding set of organizational structure for proper management of growing network of overseas economic activity as well as transactions (Briscoe, Schuler and Tarique, 2012).
As companies need to make certain changes in their human resource at time of expansion and for performing recruitment and selection of personnel. In this easy emphases will be put on influence of globalization on development of more significant and strategic human resource management function. In addition to this, essay also includes critical evaluation of the effect along with different approaches and models. At last the report ends with conclusion on globalization impact and recommendations (Dawson, 2000).
The biggest reason for a business to move towards globalization was to gain competitive advantage by effective and efficient management of human resource. Human resource management was not accentuated to such an extent and many personnel appointed in that section were not qualified or trained to manage human resource in skilled manner (Thomas, 2013). But international expansion has made it essential to consider methods for effective management of work force. With the onset of globalization process, the organization started accepting human resource approaches for systematic management of personnel. During the time increase in competition has forced businesses to concentrate more tightly on making use of these competitive strengths in order to prepare long term strategies (Debrah and Smith, 2000). This was the time when old practices and concepts were left-out and allowed initiation for involvement of strategies so as to combat with competitive situations (Higgins, 2003).
Internationalization is resulting to homogenization as well as congregation of company’s strategies and procedures and customer’s choice. Moreover it also provide new division of labour which increases the income differences among both “haves” and” have nots”. It leads to increased competition in market, enhancement in brand image and revenue of company on global context (Hutchings and Cieri, 2007). The businesses thought to take advantage of their human resource strategically for developing business on international grounds as company moves across international boundaries that offer a huge pool of skilled labor. All the organizations can develop management strategies in order to grab these market opportunities. This can be accomplished by formation of human resource planning. Such a plan is helpful in measuring recruitment needs and related developmental programs (Yeager and Nafukho, 2012). Additionally, HRP also ensures preparation of well-trained or skilled and flexible labor force that adds up to vague and altering environments.
Recruitment and selection: In these new conditions employer found it uneven to involve old tactic and systems for selecting personnel rather it emphasized on traditional approach to human resource activities.
Training and development: The changing environment want that organizations continuously train their personnel to gain competitive advantage. Training is necessary to broaden employees skills, knowledge and attitude that make them capable of executing their jobs more effectively at time of expansion (Kelliher, 2012).
Reward and management: Wages matters a lot in terms of international context as it is a source of motivation or encouragement for employees for enhancing performance. The globalization can also be beneficial for the firm for conducting recruitment by advertising through internet and select work force globally as well as allow free mobility of respective work force.
Management development: Managers must be trained by organizations in global perspective and they must know what company wants from them. They should be made skilled in a manner to think globally and proceed loyally. The ability of organization to attain its strategies largely depends on capabilities of managers for achieving demand and sustains in particular circumstances (Kleynhans, 2006).
Quality management: The human resource manager must ensure the quality of its work force at each level of company. Quality is obtained through employees of organization by providing proper training to them and developing them flexible to meet changing circumstances.
Globalization has also resulted in formation of organization culture and operating it in accordance with environmental situations.
There are several approaches in this context which support the evolution of human resource management which are traditional approach and skilled based approach (Misra, 2009). As per traditional approach that concentrate on all levels of strategic human resource management are selection, recruitment, training and development along with appraisal for evaluation of performance. The traditional approach covers models such as industrial and salaried model. In industrial model which is appropriate for blue-collared factory employees, have controlled working atmosphere that is defined in terms of stiff job definitions and office regulations. It also entails certain disciplinary actions if workers deviate from policies and processes of organization (Reddy, 2005). Such a traditional approach seems to be useless at time when company is moving towards globalization and making expansion of its business. Also, this approach implies strict working environment that result in loss of employees in longer run and hamper the business objectives of that company.
Another model is salaried model of human resource management traditional approach which is suitable for white collar jobs that have less stiff stipulations regarding employment and briefly provide job descriptions (Reed, 2001). But in this also there are rigid and defined job responsibilities for top-level managers believed as capable for taking major decisions. This approach was suitable for work force as per global situations however were tough work conditions for managers. This model increases the responsibilities of top-level managers and they have to think strategically also for performing global operations.
Skilled approach is another approach in human resource management which is new and undersized approach regarding strategic human resource management. Such an approach is suitable as per new condition of market and is being employed by many firms in its system of management (Reilly and Williams, 2012). The skilled based approach appraises individuals for diversified skills regardless of the position in job they hold. This approach is rapidly broadening in terms of compensation innovations in most of the countries. Organizations found this approach beneficial in terms of global circumstances as it involve developed training methods, high wages and techniques requiring more employees’ participation like sharing business related information with employees and self-managed teams. This approach can be used for globalization and make company capable of using its human resource for achieving company’s objectives (Sharma, 2009).
Globalization have brought changes to number and type of jobs which are available with the organization and need that organization must balance issues related to managing individuals in different locations, cultures, legal and business situations. The company faces certain challenges in global market which are challenges of advancing human capital, market challenges and demographics circumstances (Sparrow, Brewster and Harris, 2004). Along with this, it also focuses on challenges for making change and cost-related issues. Advancements in human capital are made with changing market and economic conditions through training programs that make work of employees easy and give capability to perform well.
The market challenges include economic changes that can be due to inflation, change in GDP and spending power of people. This also covers challenges related to technology which company has to keep in knowledge so as to involve make changes in their business process in order to earn profit. Such market modifications are varied as per changing demographics and company has to employ necessary changes for meeting challenges. The major difficulty for an organization is to maintain cost involved in performing all these operations and upholding human resource management in distinct conditions of a particular country. The cost is in form of wages given to employees, resources required in training and development and other management functions (Cheng, 2004).
The impact of globalization on human resource department can be understood with the example of Unilever Company. It is an anglo-dutch international customer goods organization and is public listed company with annual revenue of € 51.32 billion in year 2012. Firm offer a wide range of products related to cleansing agents, food and beverages, personal care items. The organization recently decided to outsource its human resource procedures for workforce in Latin America and want to bring alterations in its human resource in distinct sections of business according to IBM signals. Unilever signed a contract with IBM for a period of five years in which IBM offers database management of work force, advantage to administration and develop employee contract centers in Brazil and Mexico.
Unilever wants to sustain and expand in particular country’s environment and legal formalities along with competition therefore developing its employees and human resource department activities and make best use of available techniques (Unilever HR Outsourcing Deal Shows Buyers Are Willing to Use Multiple Providers, 2013). Such a strategy was helpful to organization for its strategic human resource development i.e. managing individual performance through information technology and database. Secondly, Unilever is also capable to evaluate employees on basis of their job in changed environment of Latin America as well as can shape organization culture and recruit, select and train individuals according to their skills and need of that company. Finally, the contract also helped in achieving competitive advantage by using strength of its working personnel in business and giving tough competition to its competitors in that market.
There are several recommendations for the companies for managing its human resource for expansion and reduce difficulties at time of diversification. The company which is undergoing globalization can conduct research of that country to know market conditions and also to know employment laws applicable in that country. While diversification organization can structure favorable employment policies and rules that attract employees towards organization. As studied above the firm recruits and select individuals of that nation and thereafter train them according to changing market situations (A Traditional Approach to Human Resource Management, 2012).
But companies can involve strategic decisions like taken by Unilever Company to stabilize its expansion process in Latin America. In addition to this, organization can involve different evaluation procedure for retaining as well as sustaining employees and achieve goals or objectives of firm. When the workforce is satisfied with the policies and procedures of company then they perform happily and help organization to combat with market situations. At last it can also move towards achieving loyalty of its labor force involving them in decision-making process that makes them feel as a sense of responsibility and enhance their loyalty towards organization (Lawler, 2013).
Therefore it can be concluded that human resource management developed in business after initiation of globalization process. The expansion of business across national boundaries had provided many challenges to managers to make necessary changes in almost every aspect of business management including human resource. Human resource is biggest resource of company and can be deployed strategically in order to achieve benefits in expansion. Almost every company used techniques and several approaches of human resource management in process of expansion. These approaches were useful to some extent but also were not applicable in one or the other context for globalization procedure.
It has shown that globalization has influenced the organization in several terms which forced it to make use of techniques and design its strategic human resource so as to make it significant for the firm. In addition to this the above essay also concludes that human resource is the most important strength of particular company and use this strength in a manner to make competitive advantage and sustain in changing country’s environmental circumstances. The effect of globalization that bring necessary changes in human resource department is explained with the help of an example of Unilever company that signed contract with IBM company for managing its human resource for expansion purposes (The Impact of Globalization on Human Resource Management in Zambia: Gaining Competitive Advantage through Effective Management of Human Resources, 2006).
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