Country of origin effect on Strategic International Human Resource Management

Discuss about the International Human Resource Management for Manufacture.

The primary objective of this paper is to explain the implication of the strategic international human resource management. The paper discusses that how country of origin puts direct impact on the functions of strategic international human resource management. The home and host country effect, power and politics of the home country also have been explained in the task.  Here is the discussion about the IRHM strategies, culture and IHRM structures. More detail of the task has been detailed below.

Country of origin is the country of production, manufacture, or growth where an article or product comes from. The country of origin labeling is also called as place based branding. The country of origin is the place from which the merchandise was direct received. Human resource management is a significant and vital part of the multinational companies that help to make unique and effective policies, strategies and plans in the global market (Scullion and Collings, 2011). The country of origin effect on the company’s strategic behavior thus can be medicated by a strong and effective regulatory structure or framework in the host country. In today’s globalization world, the strategic human resource management has become a foremost and significant research field (Jackson et al, 2011). The country of origin is an effective element describing the multinational companies. It has been analyzed that country of origin effect through the SHRM to manage and handle their foreign establishments (Guest, 2011).

The strategic human resource management may be defined as a practice or process of attracting, rewarding, developing and retaining the potential and capable workers for the advantage of both the employees as individuals and the company as whole. The goal and objective of a human resource department affect and support the goals and objective of the rest of the organization. The multinational companies may be influenced by both the headquarter strategies and policies and socio-political situations of the home country (Hillman, Withers and Collins (2009). For example, the operations and functions of German MNC’s are affected by ample of socio-political interest groups of their host countries (Akram et al, 2011). The country of origin has a pivotal affect on the multinational international human resource management. The country of origin is not effective element affecting the Strategic international human resource management of foreign subsidiaries. The strategic international human resource management is vital for the unique leveraging of human resources in the organization to attain the desired long term business strategies (Anvari and Amin, 2010). International strategic human resource management as the area of study or analysis within the IHRM deals and manages with the way in which multinational companies that have internalized their business handle human resources in entities abroad. It is noted that country of origin may influence the strategic international human resource management from various ways. Some of the factors that can affect the business activities and operations of strategic international human resources management are discussed below.

Institutions (home and host country effect)

Institutions (home and host country effect):  It has been found that various factors affect the profitability of the multinational companies in home country and host country as well. The unpredictable growth and success of the multinational is due to the perception of internalization which has no limits or boundaries. There are flows of goods, technology and capital usually within the country’s economic. This also leads to high and immense competition in the industry and generally tends to explore and expand their business to survive and flourish in the international market. The cost of origin will also affect the cost of FDI adversely and positively as well. The FDI cost in home and host country will affect the functions of strategic international human resource management in a large extent. When a multinational company establishes with the superior and excellent skills which can produce quality items at suitable prices, it may affect the domestic producers adversely.

Balance of payments could also be affected by FDI by two sources. Due to FDI, the home country as well as home country is mainly influenced by employment and capital. For example a multinational company who is already located in United Kingdom wants to initiate its business activities in German country, using its technology and capital there would be an addition of financial position to the host country that home country. Thus, the FDI is quite different in home country as well as host country that have direct impact on the operations and activities of strategic international human resources management. Along with this, rules, regulations and norms of home country and host country as well also affect the activities of strategic international human resource management. For example, if a MNC’s that is already situated in China wants to expand its business in India then ample of things could be affected the operations and activities of MNC’s. The strategic international human resource management needs to focus on the norms, policies and regulations of host country (India) to gain competitive advantages in such country. Apart from this, strategic IHRM is accountable of rendering job satisfaction and self actualization between the employees and management as well. They maintain the standards of the work life and provide support in the practice of plans, strategies, policies and ethical behavior in the organization. Along with this, climate change, globalization and technology and resources also affect the efficiency of the strategic international human resource management in the global extent.

Culture

Culture: It has been found from the various analysis that culture of the home country also affects the strategic international human resource management in host country. It is noted that different countries follow different culture and religious thus it may affect the outcomes of strategic IHRM. The economy as well as culture are interacting and in strongly and highly affecting the relationship. The human resources have an unexceptionable impact on the success, growth and performance of the international activities and operations in the multinational corporations. Along with this, they are seen as a vital element of competition in the international market. The companies who are operating in the international environment choose a model of their organizational culture to make unique and effective decision in the global market. Further, it has been analyzed that MNC’s are boosting at such a high speed that there is no scope from accepting to the cultural changes. The home country’s culture and its impact on the strategic international human resource management has become an interesting and unique topic in today’s competitive world (Jiang et al, 2012).

The different countries have different management, leadership styles, structure, country systems and practices. For example pay for performance and efficiency scheme and policies that are famous in UK and UK cannot be effective and efficiently practiced in another nation. Simultaneously, Japanese invest more and more money for recreational and social activities rather than Americans. MNC’s policies on staffing, motivation and training etc. have been influenced by cultural changes. Moreover, it is also evaluated that each and every company follow different recruitment policies thus hiring workers depend upon the different cultural attitudes and aspects. The different cultural attitudes include ethnocentrism, polycentrism and geo-centrism. It is analyzed that ethnocentrism may be defined as a cultural attitude wherein one’s own culture is considered rather than others. When MNC’s expands and flourishes their business they tend to compel the same practices, policies and strategies in the host country that they follow in the home country. The workers feel negative about such as cultural aspects and they find it very complicated and self centered. Thus, it also affects the outputs and strategies of the strategic international human resource management. In addition, the parent company recruits a domestic manager or leader in the foreign subsidiary as he has better understanding about the custom, nature, behavior and culture in the host countries. Geo-centrism is also another unique and effective attitude of culture in the competitive market. Any candidate can apply for particular position of the company across the world (Sterner and Coria, 2013). The excellent manager with unique skills and qualification can be recruited in the host country. This will also lead to more bonding and interaction between the workers as they promoted to different divisions across the global and so analyze and understand the various culture and aspects. All these aspects may influence the growth of strategic international human resource management (Bratton and Gold, 2017).

Conclusions

Along with this, selection process is quite different in different countries. It is revealed that some countries follow extensive and attractive selection process such as Asia whereas some nations follow short and complex selection process such as United States. But sometimes, a screening procedure is followed by sessions with talented and qualified professional psychologist who tries to make people aware of the various culture, style and work of living in the different countries. In addition, workers will find it quite complex to adapt to the dressing, food habits, language and life style etc that makes them and their family as well depressed. Therefore, strategic international human resource management must appoint a applicant who has technical skills, knowledge, desire to work overseas, stress management skills and good family situations etc. Training and development policies of home country could also affect the operations and functions of strategic international human resource management. Training and development is a process that every worker has to undergo to analyze and understand the company, work and its culture. The strategic IHRM finds it challenging and complex to train the workers from different nations having different food, language, culture, norms, values, habits and regulations. For example, the multinational companies keep a distance of approx 6 inches while communicating with other in America whereas Arabian people communicate and cooperate closely and effectively. Moreover, the significance of gestures and words are quite different in different countries that make it more complex to cooperate and communicate efficiently and successfully. This international human resource management find it quite complex to train the people in host country. Compensation policy of the country of origin also affects the strategic international human resource management. There is a variety of different in the cost of living, tax structure, retirement policy, and pension scheme among the different countries. So while determining compensation and incentive an HR manager must consider all the above attributes. Motivation also affects the profitability of strategic international human resource management. The managers and top management need to understand the need and requirement to inspire the workers (Holburn and Zelner, 2010). Along with this, the meaning of motivation also is quite different from country to country and it also affect the culture of different countries. For example, the multinational companies in America give more significance to work and less significance to wealth or riches while china considers the self achievement and riches. Thus, international human resource management will have to clear understanding of these cultures, norms and originate the motivational strategies and policies in this view (Hayne and Hillman, 2010).

Performance appraisal also affects the actions of strategic IHRM. There should a manager or leader who can provide appropriate appraisals on time. In various multinational companies, discrimination takes place that leads to disappointment and less job satisfaction (Lengnick-Hall et al, 2009). It is noted that some managers have no idea about the performance and productivity of an expat. It also has been observed that each and every country follows a different leadership style. For example, the decision making structure is more centralized in Germany rather than UK. On the other hand, Japanese prefer to act as silent leaders whereas Korean follows the paternalistic leadership style and Arabs prefer silence to be weak (Sterner and Coria, 2013).

Power and politics:The power and politics also affect the tasks and duties of strategic international human resource management. The stability and nature of political systems are different from in home country as well as home country. For example, the United States multinational companies maintain stable political system and the same is followed by developed country in Europe (Daley, 2012). Although, prime ministers, presidents, governors and representatives may change, the legal system and legislations are well established and global companies can depend on the consistency and continuity. The managing human resources in different economies, cultures and legal systems present some challenges and issues. The political crisis has always been an issue for locally operating companies. The external elements are dynamics and uncontrollable in strategic international human resource management. In addition, political factors such as norms, legislations and regulations are one of the major forces that are accountable for a company’s mission and strategy. In some countries, rules, regulations and legislations address issues such as sexual harassment and employment discrimination while some countries are accepted employment discrimination and ethical differences.  The political system, government, legislative bodies and legal system and industrial relations are also affect the strategic international human resource management (Sterner and Coria, 2013). Some other political factors such as national minimum wage, tax rates, VAT, corporate tax, economic factors, interest rates and exchange rates also will affect the MNC’s host country. For example, if the MNC’s that is situated in United Kingdom wants to implement new business in India then political factors of united Kingdom will affect the operations of strategic IHRM in India (Naranjo-Valencia, Jiménez-Jiménez and Sanz-Valle, 2011). The United Kingdom is a constitutional monarchy that follows a parliamentary system. Along with this, UK also has a strong and unique economic position relative to other countries while India is the largest democratic country in the world as it runs on a federal form of government. All these factors will influence the strategic international human resource management (Pierce and Aguinis, 2013).

MNC’s strategy and integration: It has been found that MNC’s strategy and integration also affect the strategic international human resource management adversely. Due to rising globalization, the companies have been able to stay in the competitive market. There are four types of strategies such as global strategy, transformational strategy, international strategy and multidomestic strategy. The multidomestic strategy focuses on the low integration and high responsiveness (Jackson, Schuler and Jiang, 2014). The companies with multidomestic strategy have as object to meet the requirements and needs of the local market by tailoring and customizing their products and services in a large extent. The global strategy analyzes and focuses on the high integration and low responsiveness. The multinational companies are quite opposite of multidomestic companies in the global market. They render standardized products across the world and have the object to increase and enhance the efficiency to reduce costs as much as possible (Luo and Wang, 2012). In addition, transnational strategy considers high integration and high responsiveness. The transnational company has characteristics of both the multidomestic and global company. Its main objective is to maximize local responsiveness but also attain advantages from the global integration. In addition, international strategy is also used by the multinational companies in the marketplace. This strategy includes low integration and low responsiveness (Anvari and Seliman, 2010). An international firm further has little need for a local adaption and global integration. Aside this, global integration pressures are main forces that make MNC’s exploit globally resources and integrate their operations and activities on a global basis to understand and evaluate the economies of scale and attain cost reduction. Furthermore, strategic alliance also plays a significant role to stay in the global market and to beat the competitors (Thite Wilkinson and Shah, 2012).

The international HRM structure: The international HRM structure also affects the success and progress of the multinational companies in the global market. For example, multinational companies in United States maintain unique and effective HR policies, strategies and plans to gain competitive advantages. The political condition of the country is stable and skilled employees are appointed by the company. Young women and youth are working in the MNC’s in United Kingdom.  Skilled, educated and qualified employees are working in the multinational companies (Shaffer et al, 2012). Along with this, MNC’s in United States uses formal, informal and targeting methods to recruit and appoint the talented and skilled employees in the workplace. In addition, appreciation is done by the multinational companies in retain and attract the maximum number of employees (Vance and Paik, 2014). The minimum wages are $7.25 in a hour in USA. On the other hand, the firm is not much focused on the training and development. The multinational companies invest low expenditure on informal and formal training. On the other hand, the strategic human resource management is not stable in India due to lack of poor workforce. Furthermore, the company can utilize the resources in Indian market effectively and successfully. In addition, the company provides low wages and salary to the employees in the Indian market. All these things could affect the sustainability and outputs of IHRM in the international market (Alfes et al, 2013).

Type of employees: The employees are considered one of the biggest strengths for the multinational companies. For example, MNC’s in United Kingdom mainly focuses on the full time, part time and causal employees to fulfill the needs of the customers and to accomplish the long term goals and objectives (Jiang et al, 2012). The companies provide high wage and incentives to the workers in such country. Basically, performance management system is used by the multinational companies in the United States. The employees mainly focus on the self esteem need of Maslow theory. On the other hand, if the MNC’s implements its business activities in Indian market then it can hire employees at reasonable cost and furthermore, no additional cost is paid by the company to the mediator and third party. The Indian employees are not much talented, skilled and qualified as compared to the United States. MNC’s needs to appoint full time employees for fulfilling the roles and responsibilities in the Indian market. The multinational companies have to pay low cost to recruit and attract the applicants in India. In this way, employees also affect the strategic international human resources management adversely and positively as well (Armstrong and Taylor, 2014).

It is concluded from the above mentioned limelight event that Strategic international human resource management plays a significant and vital role in each and every company to survive and grow the business activities and operations successfully. The sustainable strategic IHRM also motivates and encourages the potential workers for performing roles and responsibilities in a hassle free manner. The above analysis shows that how country of origin affects the activities and operations of strategic international human resource management. No firm can survive and lead its business activities without using sustainable and effective strategic IHRM within the organization.

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