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How has Globalisation affected HRM?

Article by Chris Kerridge, Business Analyst

Globalisation has made us a multi-cultural society which has implications on human resource management within the UK and the developing nations. There are four theoretical frameworks that explore the influences on HRM across international boundaries, including: cultural, institutional, universal and contingency perspectives. 

The cultural perspective suggests there are clear cultural differences between nationalities and these should be recognised. Multi-national corporations which accept and recognise these cultural differences in managing employees through HR practices will be successful in their host countries.  

The institutional perspective accepts there are differences that need to be understood and recognised within societies and these have an impact on the HR practices, but it rejects the concept that certain practices, such as recruitment and selection, performance management and reward lead to improved organisational performance as these practices may mean different things within different societies.  

The universal perspective approach claims that certain HR practices, such as performance management, recruitment and selection and reward lead to higher organisational performance. Marchington and Wilkinson (2012) further highlight that in their belief that HR practices that are successful in the home country should be adopted into the host country. A criticism of this viewpoint is that it does not take into account internal and external factors, such as the characteristics of the organisation or the culture of its host country. 

Finally, the contingency perspective depends on both the internal and external factors of an organisation for the take up of HR practices. The key features for HRM are the location of the organisation, the product market, the organisations life cycle stage and if the organisation is privately owned or a joint venture. Each of these factors will have an effect on HRM, for example where the organisation is based will depend on the HR practices and policies it deploys. 

Influences and Implications on HRM  

Marchington and Wilkinson (2012) argue that the influences and implications on HRM in multi-national corporations depends on the type of organisation, it’s product life cycle and the core belief of its hierarchy. Edwards (2011) takes this view further and outlines that the influences are categorised into home country/country of origin effects, dominance effects, international integration effects and host country effects.  

The home country/country of origin view supports the enforcing of headquarter HR practices from the home country across all countries where there is a subsidiary. All countries where there is a subsidiary for the multi-national corporation will adopt a single approach to HR practices, such as recruitment and selection, reward and performance management. Using this model means the MNC doesn’t take into account local culture and practice when implementing HR practices.  

The dominance effect supports a standard approach of HR practices across all countries for the multi-national corporation as this is seen to be best practice internationally. Again this doesn’t take into account local culture and practices in which the MNC operates.  

The international integration effect relates to the extent at which the multi-national corporations build closer relationships across different boarders. MNCs may move their headquarters from their home country to other regional countries, adopting their exiting HR policies whilst also bringing some best practice from the home country.  

The host country effect adopts the HR practices and policies of the host country in which the multi-national corporation operates in. This could be due to it being too difficult to enforce the home country HR practices and policies due to cultural differences or the practices and policies in place do not need to be changed.  

Globalisation is seen to be a complex and controversial subject with many supporters and critics. The implications on HR for multi-national corporations are dependent on a variety of factors. Market pressures and local influences, such as culture, have strong implications on HR practices implemented by multi-national corporations with research supporting the view of the complexities and different influences. It can be argued therefore that there is no one best fit for HR practices for all organisations across the globe, but there are some best fit processes that can be incorporated along with the local culture and business practice.  

Organisations are becoming more international and having systems, policies and process in place to be able to deal with this changing landscape of UK companies’ workforce is paramount. A system for employees which supports multiple language and different date formats will help improve engagement as they can manage their own data in their native language. This also enables organisations to roll out employee self-service access to other countries, as well as providing non UK nationals who work for UK organisations to use the application in their chosen language 

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