International Human Resource Management

Introduction

According to the writings of Björkman and Welch (2015), they argue that Human Resource Management (HRM) refers to an approach that aims towards the management of employment. As such, it seeks to attain competitive advantage with the assistance of a strategic implementation or deployment of a competent workforce, with the use of an array of techniques involving structural, cultural and personnel aspects. On the other hand, International HRM refers to the global management of human resource in the multinational venture. In this case, IHRM is an international concept as opposed to HRM. This paper critically focuses on two key functions performed under IHRM, which comprise of training and development and reward management. With reference to the writings by Sparrow (2013), he argued that reward management refers to a strategic obligation of IHRM to formulate and implement policies that aim at rewarding the employees fairly, consistently and equitably. Wilson (2014) stresses that training refers to a planned and structured process that aims towards changing the attitudes and facilitating acquisition of new knowledge as well as enhancing the skills of employees, whereas development refers to the organisational system of providing employees within the organisation, the opportunities to improve their skills and competencies as such, reaching their full potential. Additionally, the paper is divided into four sections that commences with the current introduction whereby it lays out definition of key terms used in the paper, the structure as well as the thesis statement. The second section will provide a critical and in-depth on how reward management affects organisational performance followed by a similar focus on training and development. It is important to note that the paper seeks to conduct a critical analysis using literature review and case studies that highlight on how international human resource management contributes to organizational performance. According to Sparrow (2013), theoretical approaches targeting towards an effective HRM comprise of resource based, best fit, and best practice. Best practice facilitates the efficacy of the HR practices, thereby, promoting higher organizational performance. On the other hand, Brewster et al. (2016) points out that best fit entail the HR practices that vary between different organizations, as such, depending on a particular business strategy; its HRM is clearly defined. Whereas resource-based focuses on the organization’s internal factors as well as resources that enable it to attain favorable market competition. Overall, Strategic Human Resource Management (SHRM) aims at linking the HRM to the business goals, thereby, achieving the effective organizational performance. With reference to the book by Ożgo and Brewster (2015), they state that the key strategic functions of HRM are resourcing, employee performance management, employee reward management, training, and development of employees and managing employee relations. All these functions, when well implemented, correspond to higher employee commitments towards better performance, hence facilitating the organizational performance. Lertxundi and Landeta (2012) further note that IHRM encounters different challenges when dealing with employees from different nations. Such is due to how Employee Relations (ER) differs cross-nationally by the legal framework, cultural differences concerning ER, different technology models and industrial organizations, different trade union powers and different opinions of ER key concepts.

Reward Management

Theories Underlining Reward Strategy

According to Tenhiälä et al (2016), they state that international reward management is practically concerned with the implementation of policies and strategies that are required to ascertain that employees’ value and their contributions towards achieving the organizational goals are recognised and rewarded accordingly. The aim of the reward process is to attract competent employees, retaining the best, motivate them, and enhance the business strategy by promoting the required behavior amongst the employees. Kang and Shen (2017) further argue that the different cross-national cultures have proven to be a significant factor to consider when designing reward systems as different cultures in different countries have a different perception of issues concerning the pay merit and long lasting benefits. However, with reference to the writings by Kang and Shen (2016), they argue that corporate culture is significant at an organizational level. A good example is McDonald’s case study where McDonald's uses a large ethnocentric method of approach towards reward management. In this case, the company pays a higher 50% wages in relation to the cost of living in Nordic counties, than in the UK, where there are suitable staffs in the local markets; this puts into consideration that the perception of the ability to attract employees is difficult in Nordic countries. Similarly, employees should perceive that their efforts would result in organizational reward. In this case, if the targets are not achievable, then the rewards will not motivate them. IHRM aims at promoting fairness to all the employees in the countries that the company is working with, as such; it enhances the employee relations, which will in turn boost the organization’s performance.

Link between Reward Management and Organizational Performance

Under IHRM, there are different approaches that aim towards reward management as they are influenced by cultural approaches and challenges for expats. Sparrow (2013) further states that the organizational decisions regarding reward management should be effectively strategic as it influences the performance of employees, thereby influencing the performance of the organization. Notably, there are two types of rewards, which consist of extrinsic and intrinsic reward. The intrinsic reward is internally driven; in this case, the reward is connected to work satisfaction of an employee. The extrinsic reward is linked to monetary as well as non-monetary benefits. Both intrinsic and extrinsic rewards improve the quality of performance from employees. In this regard, they are both valuable. Overall, Chitakornkijsil (2010) notes that reward comprises of employee pay and associated benefits, which the company develops for individual or a group of employees. The pay can relate to the job structure or performance of the employee. International companies incorporate reward management in their organizational strategy to motivate the employee towards improving their productivity within intent of enhancing organisational performance. Kang and Shen (2016) further argue that reward management also focuses on the purpose of promoting fairness to employees, as such, improving the organizational performance. Different cultures and political aspects in different countries aid the multi-national organizations in determining the most suitable reward system that can satisfy employees, to enable them to improve their work output, thereby, facilitating the improvement in the organization’s performance.

Positive Impacts of Reward Management to Organizational Performance

Employees from different countries are likely to be rewarded by different factors regarding their different cultures. In this regard, culture plays a vital role in identifying the favorable conditions or factors that can be used in rewarding these employees, which in turn encourages them to improve their individual performance, and subsequently, the performance of the organization. Notably, according to De Roeck et al (2014), they argue that it is clear that employees in different countries believe in fairness. In this case, fair treatment on people’s cultural backgrounds facilitates positive organizational performance as they will gain their satisfaction or need, which is the most crucial element. Additionally, expectancy theory stipulates that motivational reward is influenced by an individual’s effort that enhances performance, which then leads to positive organizational performance. According to the writings of Thite (2012), he states that a good example is the case study of a multinational Indian company, which has achieved its success through proper reward management system in its IHRM. Initially, the company was called Alpha, established in India in 1987 but currently it is recognized in both India and New York. In 2010, Alpha Company had a turnover of US$2.5 Billion, as from its operations, with around 45,000 employed professionals in over 44 nations. For the company to take root in the broad market, it is obligated to take positively, the ideologies and cultural differences of the employees from different nations. As such, it has spread its geographical diversification due to its excellence in people’s management in the reward systems, thereby, it can manage to attract and retain the best employees through consistent, equitable, and fair reward management.

Negative impacts of reward management to organizational performance

Notably, in the writings of Tenhiälä et al. (2016), they state that Different countries have different perceptions regarding the approaches of HRM that are aimed towards the key function of rewarding management, as such; some countries regard it as strategic and others as administrative. This can bring about unnecessary disagreements, which might disrupt the organization’s performance as non-unionism has proven to be the greatest aspect of failure to a multinational organization. The IHRM professionals use rewards mainly to motivate their employees. International countries, however, might have different cultural beliefs concerning the system, which might negatively affect the organization’s reward policy. According to the writings of Mueller et al. (2012), they argue that the major challenge is that there are reward systems that work perfectly well in one country and those that are much effective in another. A good example is that while UK and US companies prefer using merit-based reward systems, other companies in Japan and Korea, which are rated low on individualism would perceive that this system rewarding employees is a contravention of their nation’ corporate culture. In the journal written by Howe-Walsh and Schyns (2010), they point out that in countries having individualism; employees are often motivated by incentives unlike in countries lacking individualism. Performance reward is lower in countries with high power cultures, which affects the organizational performance. Overall, the reward management can cause adverse impact to the multi-national company if the strategy is not well implemented. As such, it is advisable that IHRM professionals need to be well acquainted with the knowledge concerning the cultural difference of the involved nations, to eradicate the problematic issues regarding reward management that might come by, hence, affecting the organizational performance.

Training & Development

Methods of Training and Development

Fuchs et al. (2016) argue that training relates to formalized learning activities like structured programs, which cover a variety of management qualifications necessary for induction. Typically, according to the writings by Michie (2011), he argues that training of employees leads to their skillful development. In this regard, the development of employees incorporates three forms of activities, which comprise of training, management development, and career development. The techniques, as well as policies for developing employees, differ across organizations. Shen (2011) further proposes that the methods of training and developing employees are; educational training and workplace learning, self-development groups, job rotation, coaching, learning logs, mentoring and action learning. The best practice needed for systematic training and development involves four processes and those are; organizational and individual training analysis, training design, training delivery and evaluation of training effectiveness. IHRM incorporates training and development to employees to ensure that they have vast knowledge and skills, to be able to work even under little supervision.

Theoretical Relevance of Training and Development to Organizational Performance

The skills and knowledge that employees acquire through training and development have become critical to the survival of the organisation especially with the rapid changes in the organizational systems and technology. According to Gond et al. (2011), they state that many international organizations believe in training and development because it has proven to be a give the organization a better chance of improving its workforce performance. However, the relationship linking training and development of employees and the performance of an organization performance has been a subject of many considerable debates. With reference to the writings of Wojtaszczyk (2007), he suggests that international companies emphasize and stress on the interrelatedness of HRM policies regarding training and development of employees and performance and it proves that these two functions increases the individual performance of employees, which in turn improves the organizational performance. Factually, Fuchs et al. (2016) further notes that training and development strategy of an international organization plays an important role to the HRM, thereby, contributing to employee commitment, improved organization’s strategic integration, and employee flexibility as well as quality output. With reference to the writings of Thite (2012), he states that similarly to the case of Indian Multinational Corporation. A world class IT Company, is successful because its HR professionals have incorporated an effective management expertise, knowledge, and skills to employees as such, it ensures that quality workforce output is realized. In this regard, over the recent years, the company has been able to build a competitive advantage over the other companies in the market. The Indian multinational has received some international awards. Thite (2012) further states that the company received the overall best employer company for training excellence award from American Society for Training and Development (ASTD). This has proven the reason for its success; it can favorably compete in the competitive environment due to the knowledgeable and skillful workforce within its internal environment.

Positive Impacts of Training and Development to Organizational Performance

According to the journal by Khan et al. (2011), they argue that there are different types of skills that employees need to train and develop in order to improve the organizational performance. Similarly, there are different methods of training and development that organizations need to incorporate into their strategic systems, which can enable employees to be at par with their working standards. In this case, the training and development aids in equipping employees with skills that will help them to carry out their roles easily safeguard their productivities as well as encourage value addition to enhance favorable competition, which subsequently leads to high performance in the workforce. With reference to the writings of Wojtaszczyk (2007), he points out that training and development also influence the employees with necessary skills to be able to adopt to change when competing in the international market. Additionally, it also aided in enhancing the organizational commitment, and as such, its performance equally improved. IHRM has the task of implementing the international cross-cultural management in order to adapt to the conditions of the different forms of training and development. With reference to the writings of Wilson (2014), he proposes that IHRM aims at maximizing both the employee performance as well as the organizational performance. Additionally, the training and development content is vast, thereby, it focuses on the local culture in different countries to prevent potential conflicts regarding cultural differences. Overall, training and development of employees promote efficiency in a workplace, when the employees possess vast skills and knowledge about their job descriptions. This, in turn, enhances the performance of the organization.

Negative Impacts of Training and Development to Organizational Performance

With reference to the writings of Fuchs et al. (2016), they argue that training and development, for international organizations have adverse impacts to the organizational performance as follows; first, they may lead to increased control by the management who impact on the level of productivity for employees. As a result, it might disrupt the organizations performance. Secondly, training and development requires a lot of cost, as such, might bring down the financial aspect of the organization. In this regard, IHRM might part with a lot of money to have employees trained and developed skillfully, thus, disrupting the organizational performance. Additionally, according to Gond et al. (2011), they state that for IHRM training and development might be hard to co-ordinate because of different challenges such as cultural differences. In this case, there might be countries in which the employees do not accept certain organizational training and development because of their background cultural beliefs and as such, disrupting the organizational performance. Furthermore, a proposed training and development program might be accepted by a country. That does not guarantee that the other countries will as well accept it. Furthermore, Shen (2011) further suggest that training and development might cause non-unionism amongst employees. In this regard, the trained and skilled ones would despise and seem superior to the less skilled, which might tamper with the employee relations within the organization. Similarly, there are several cases of competitiveness amongst the skilled employees, which might disrupt the organizational performance. Besides, according to Michie (2011), he argues that the skills that are required are expected to develop from the individual attributes, of which, some employees might be competent but do not possess the required personal attributes needed for the development of the skills.

Conclusion

With reference to the writings by Shen and Jiuhua (2011) they suggest that IHRM differs from HRM and is more difficult to handle than HRM due to political, socio- economic and cultural factors. In the theoretical writings of Newman et al. (2016), they state that over the recent years, organizations have experienced the significance of International human resources. Notably, the effectiveness of IHRM can be accomplished if the HR professionals possess an understanding of cultural differences in different countries across the globe. According to Lertxundi and Landeta (2012) they argue that international management of human resource has enabled organizations to compete more favorably in the world and it has proven to be a crucial development tool for competent employees. However, IHRM practices might not generalize all countries as the nations have different laws, different policies as well as cultures. With reference to the book by Ożgo and Brewster (2015), they state that international researchers have identified the key functions of the HRM and from the above discussions, training and development and reward management, when well incorporated into the organization’s system, they become relevant for an international organization to achieve its success. However, the challenges of IHRM such as culture differences among nations can easily me managed since an international organization can possibly influence the culture of the nations with which it is operating. Additionally, with the gradual increase in international activities, and opening of various international markets, more multinational companies will emerge. However, the companies will need new demands to their personnel and organizational structure to succeed. The case studies discussed above are relevant to the topics and as such, help to critically analyze the concepts of reward management and training and development.

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References

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