Key International HRM Issues

Introduction

In contemporary highly globalised economy, a crucial role is played by multinational companies and these global companies have a dominating power in the business setting all around the world because of having maximum capability of doing business across wide variety of settings. In addition to this, in case of multinational organisations employees are hired by the management from various countries, so human resource management has to face various challenges (Carbery and Cross, 2013). Due to the international expansion of business, the human resource management of the firm transforms to international human resource management. In order to manage international business operations, HR managers of the firm have to face various issues and should focus on various effective IHRM strategies (Harzing and Pinnington, 2010). The current report is written on analysing the key international HRM issues that the management of PharmaCo will have to face while expanding its business operations in UK. In addition to the analysis of key international human resource management issues, the report also includes identification of recommendations that can be followed by the management of PharmaCo in order to manage international workforce. Moreover, the case study analysis in this report has been done with the help of other examples and empirical evidences.

2. Key International HRM Issues

2.1. Recruitment and Selection

One of the key international HRM issues that the management of PharmaCo will have to face is recruitment and selection of new international managers for running business operations of the firm in UK. The initial step in recruitment and selection is human resource planning. This is a process used to forecast future demand for and supply of workforce in the international firm. Moreover, the management of firm also has to identify the right kind and right number of people required for managing international business operations. For effective recruitment and selection of employees, the management of PharmaCo should understand that this HR activity is a two-way process. There can be a possibility that candidate rejects to work for international assignment. In order to deal with this kind of issue, HR management of PharmaCo will have to focus on determining proper criteria of selection. In order to manage recruitment and selection of new international managers, following factors must be considered by the management of PharmaCo;

2.1.2. Technical ability

One of the key factors that must be considered by HR managers of PharmaCo while recruiting new international managers for managing business operations in UK is technical ability. Technical skills and capabilities of individuals are significant criterion. It has been found from various research findings that multinational companies focus highly on relevant technical capabilities and skills at the time of hiring international managers. For example, from ORC Worldwide 2002 it has been found that 72% of multinational companies select new managers on the basis of technical abilities, skills and competencies. Through putting emphasis on technical skills and capabilities, HR managers of PharmaCo can evaluate the potential of candidates (Kumari and Malhotra, 2013).

2.1.3. Cross-cultural suitability

According to Fischer (2009), there is a significant impact of cultural environment on performance of international managers in new foreign subsidiary of the firm. In addition to technical abilities, international managers are required to have cross-cultural abilities that are important to work in an international firm. While recruiting international managers, HR managers of PharmaCo have to focus on analysing that whether or not, individuals have cross-cultural suitability. In order to ensure future success of international managers, they must have cultural empathy, diplomacy, positive attitude, maturity, emotional stability and adaptability. In order to ensure effective recruitment and selection of new international managers, it must be ensured that individuals have relational capabilities. For assessing and evaluating relational capabilities, formal process must be adopted by managers.

2.1.4. Family requirements

During the selection and recruitment of managers for international assignments, there is a need of focusing on family requirements of international managers. The contribution made by family, especially the spouse, formulate the success of the international assignment is now well recorded. In spite of the significance of the associated spouse, as pointed out by Schuler et al (2011), the stress has been on the international managers. From the perspective of multinational, performance of international managers is a significant factor in host location. However, the communication between international manager, spouse and many adjustment experiences of family members is now well recorded. It needs to be pointed out that for most of the times the spouse carries a heavy burden. When a manager is recruited for an international assignment and after arrival in the country, spouse has to perform the responsibility of settling all members of the family in the new home, who may have left friends, career and relatives. In progressing countries, housekeeping job is common however it is a phase of overseas living that large number of Westerners from progressed countries feels difficulty in adjusting to. It usually is not feasible for spouse to get a job in country of assignment and at the same time education and well-being of children is also a major concern for spouse to work on. Although large number of spouses are women, accompanying men spouse also have to face similar type of issues. In fact, when there is addition of cultural adjustment issues to this type of situation, it is maybe not so astonishing to discover that few couples aim to make premature return to home.                   

2.1.5. Language

Having the capability of speaking local language is a feature usually regarded with cross-cultural ability. Nevertheless, this paper has chosen to focus on language as situation-determined regarding its significance as an aspect in the making the decision of selection. Skills of language may be considered as an important aspect for some positions of international managers, but has not gotten much significance in others, though it has been argued by few researchers that knowledge of the language of host country is a major component of international manager performance, irrespective of their position (Baddar Al-Husan et al, 2009). According to Chitakornkijsil (2010), another factor to language in making the decision of selection as a situation aspect is the responsibility of common corporate language. Large number of multinationals implements a common corporate language as an approach of standardising reporting procedures and systems. A selection barrier can be the lack of fluency in corporate language. Because of lack of competency in common language, prospective candidates may be eliminated from the list of candidates having potential of getting selected as a manager for international assignment. The capability of language hence may limit the ability of multinational enterprises to recruit the most suitable candidate.        

2.1.6. Use a selection panel

A recommendation for the process of recruiting a manager for international assignment is that one should use a selection panel which comprise of a manager from the function for which recruitment will be done, staff who have extensive knowledge of conducting business, living and working in the proposed assignment destination, Human Resource staff from host country and home and international Human Resource. 

2.1.7. Selection of candidates that have successfully completed similar types of international assignments

According to Meyskens et al (2009), recruiters need to support candidates who have prospered in the target country; followed by those candidates who have performed well in similar countries in terms of culture and the third preference will be those candidates who have prospered in other countries. If there is no candidate who falls in the above mentioned criteria, one should consider those workers who studied in a foreign country or performed any role abroad such as voluntary service or teaching and so on.

2.2. Performance Appraisal System

International performance appraisal is the most significant function of international human resource management (IHRM). It allows different multinational organisations to do the evaluation of individuals. It is the best method for appraising the performance of a manager. Performance appraisal system makes improvement in corporate, subsidiary and individual performance against some predefined goals that are directly connected to the international techniques (Festing et al, 2012; Vo and Stanton, 2011). International performance appraisal is basically a significant measurement for multinational organisations in order to control the conducts of different expatriate and also some other host country nationals (HCNs). The major objective is to ensure that all of the foreign subsidiaries perform in most suitable way, and that their performance is beneficial for the organisation (Poor et al, 2014).

2.2.1. Appraisal Methods

Andreeva et al (2014) stated that it has been widely argued that the significant factors that pertain to the fairness in performance appraisals are basically the supervisors. Supervisors should evaluate the performance of the expatriates in appropriate way and they should them with the rewards accordingly. Other factors involve appropriate frequency of appraisal, treating employees equally, and performance rating. Accurate performance appraisals of expatriate are based more of the raters that do own proper knowledge related to the assignment of expatriate. Specifically, in the setting of expatriate, the limit of the knowledge often gets influenced through the location of rater.

Formal performance appraisals are done annually. Some of the companies need those appraisals to be done at higher rates (Bartol et al, 2003). Frequent performance appraisals can let the employees to have good interpretation of this work; can also make considerable improvement in their performance. Infrequent appraisals results into the timeliness of some corrective actions, and they also result into making initiatives for improvement   (Chiang and Birtch, 2010). Chiang and Birtch (2010) have stated that the performance appraisals of both annual and biannual expatriates are regarded being appropriate and they are linked to the assumed performance appraisal accuracy in a positive way.

2.2.2. Appraisal Criteria

The criteria of performance appraisal assist in increasing the rating of accuracy in performance and it develops an organisational climate of trust and fairness (Cleveland et al, 2007). It increases the performance of the employees. The major criteria of performance appraisal which is used in different multinational enterprises are contextual objectives, soft objectives and hard objectives. Hard objectives are the ones that are quantifiable; it involves the measurement of performance like profits and sales, return on different investments and production (Whitford and Coetsee, 2006). It has been recommended that outcomes-linked measurements only consider one small part of job performance. Therefore the utilisation of hard objectives is linked with many issues. As compared to some hard objectives, soft objectives tend to be more subjective. Soft objectives consider those factors that cannot be quantified easily, like work behavior and attitudes, customer service quality, interpersonal skills and leadership skills. Assessment of soft objectives is too much significant in performance appraisals. Performance appraisal targets the achievements, abilities and job competence in the West. Less emphasis has been put over interpersonal relationships, attitudes and personality (Siders et al, 2001).

2.2.3. Feedback

Feedback involves the identification of weaknesses and strength of employees and to assess the requirements of training, which in turn helps the employees in increasing their performance level. The development of skill supply techniques have become the major imperatives of the business today (Chiang and Birtch, 2010). Provision of feedback can communicate different performance gaps related to training and expectations, and other developmental plans targeting to enhance the capabilities and skills of human capital. In accordance with the theories of work motivation, like control theory and objective setting theory, self-regulation towards the objectives needs such kinds of performance feedback that are more inherent in international performance appraisal. For instance, in the cultures of Asia, indirect response or the response provided to employees with the help of third party can be seen as inappropriate when compared with the direct feedback.

2.2.4. Approaches for Performance Management

In accordance with Soltani et al (2005), three alternative approaches can be adopted by multinational enterprises- integrative, localised and ethnocentric, for the management of appraisals. The ethnocentric approach provides the practices of performance appraisal of some host organisation to other foreign subsidiary. According to this approach, the appraisal activities that are done into the foreign subsidiaries resemble the appraisal activities of the parent organisation.

 When ethnocentric approach is used for the management of appraisals then it results into more consistency (it ensures that there are equal conditions for different expatriates that are present in various locations). It provides ease to the expatriate managers. It allows the headquarters to easily interpret the results of appraisals. The major drawback of this approach is that there is less responsiveness, which concludes into the resistance from different host country nations. The major benefit of localised approach is responsiveness towards different host environments. However, the major drawbacks is the inequality present in the between different subsidiaries which affects the performance (Draganidis and Mentzas, 2006).

According to Mone and London (2014), the integrative approach implies adopting the best-fit-practices through implementation of host and home performance appraisals. It also involves the adoption of some good appraisal exercises which get integrated through some other MNEs. This approach can acquire internal consistency, coordination and local responsiveness. It is most significant for different MNEs to consider large number of firm-specific and contextual factors for achievement of best environment for the organisation while choosing the approaches of IHRM.

For example, Pudelko and Harzing (2007) identified that in case of domination of US economy, German and Japanese subsidiaries followed different HRM practices of US. The subsidiaries of US in Germany and Japan adopted the HRM practices of the parent organisation. Subsidiaries of Japan present in Germany and German subsidiaries present in Japan all adopt integrative approach. Ethnocentric approach has been adopted by the US organisations. These MNEs transfer the practices of home appraisal to other subsidies.

2.3. Employee Voice

Another key HR issue is about management of employee voice in UK. According to Morrison (2014) the concept voice in organisational context is about way of responding to reduction in performance of organisation.  On the basis of this, Maynes and Podsakoff (2014) applied this notion to employment relations where employee voice is considered as a collective issue and usually represented with the help of trade unions.  In contrast to this, one of the notions in case of employee voice is non-unionised employee voice. The non-union employee voice is a situation where there is no presence of trade union when employees raise their voice regarding their employment condition and so on. Sometimes, this does not mean totally absence of trade unions but organisations may select to consult with a union regarding some situations and conditions of workforce with showing avoidance of recognising the union. In current case, PharmaCo is a non-unionised firm, where managers do not consult with some trade unions for dealing about their working conditions. So, while operating business in UK the managers of PharmaCo will have to make certain changes in its HR strategies of employee voice, because in UK there is more focus on unionised employee voice. In UK, the new international managers will have to deal with employees’ voice through trade unions. In order to do so effectively, the management will have to make prior contracts with trade unions and employees will be provided with complete opportunity to raise their voice against any kind of injustice.

2.4. Equality and Diversity

In addition to recruitment and selection and performance management system, HR managers of PharmaCo will have to face IHRM issue of managing equality and diversity. In UK, organisations have to fulfill legal requirement of adhering to some practices through which elimination of discrimination can be ensured. Moreover, in case of international business management, due to the presence of diverse workforce, the management of PharmaCo will have to ensure meeting of equality expectations. It is important that all individuals are treated with justice and equality (Janssens and Zanoni, 2014). In addition to this, all employees must be provided with same kinds of opportunities regardless of considering their gender, age, culture, race or anything else through which they might be discriminated against. While operating business operations in UK, the fulfillment of legislations will help in ensuring that there is fostering of inclusive working environment. Similarly, the international HR management of PharmaCo should ensure that no difference is kept as an obstacle to career progression of any individual due to his or her culture. In order to run business successfully in UK, HR management of PharmaCo will have to ensure fulfillment of following legal standards;

  • Equality Act
  • Sex Discrimination Act
  • Race Relations Act
  • Human Rights Act
  • Disability Discrimination Act

In UK, equality is related to promotion and fostering of every individual’s rights, keeping no discrimination and to have choice and dignity with right to individual’s own beliefs and norms. In contrast to this, diversity literally means varied and different. It is related to creation of culture through which individual differences are valued and variety for gaining maximum benefits by the firm (Richard et al, 2013).

 3. Conclusion

The above analysis has shown that HR management of PharmaCo will have to face various key international HR management issues while expanding business operations in UK. The four key issues will be recruitment and selection of new international managers, their performance management strategies, diversity and equality management and employees’ voice management. In order to manage international business operations successfully, the management of PharmaCo will have to follow some key IHRM strategies for efficiently tackling with these issues.

 

 

 

 

 

 

 

 

 

 

 

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