International Human Resource Management Overview And Challenges

Importance of Human Resource Management Department

With the increasing ramified economic changes, each and every organization needs to establish separate human resources management department. It assists the organization in hiring, recruiting, selecting and staffing of employees in an efficient manner. The employee’s turnover and success of the organization is highly dependent upon the HRM department of the organization in the globalized world (Gomes, et al., 2015).  Every organization has a human resource department as there are many people working for the achievement of the goals. These are important assets of the organization and it is really important to take care of them. In this concern, every organization has a human resource department that takes care of the benefits and regulations about the employees. To manage the human resource of the organization is known as Human resource management. The reason behind designing this system is to improve the performance of the employees to achieve the strategic objectives of the organization. International human resource management is the same thing in which some functions have been considered like recruitment, selection, training, and development, dismissal and performance appraisal. These are the main important things that need to be taken care by human resource management of each organization.  IHRM refers to the management of human resources belongs to MNC. In such circumstances, three categories of employees need to be managed.  There are a big number of activities that need to be managed on the international level. Human resource department of an MNC needs to understand the laws, rules, and regulations of each country due to the different applicability of Law.

International Human Resource management refers to an effective management of human resources in order to achieve organizational goals (Abraham, 2014). It is the set of activities and process which assists in achieving the set objectives and goals in determined approach.  There are some main functions that need to be handled by human resource departments like recruitment, selection, and training. As per the views of Training & development, (2006) it is revealed that These are the basic things for each and every organization. When an employee joins a new organization then it is the responsibility of human resource management to make him comfortable by introducing the organization, its people, and environment. International human resource management is concerned with the international standards. As per the views of the Rossouw, D. and Van Vuuren, L. (2017), it is divulged that international HRM practice should be based on the proper employee’s development factors and organizational development.  International HRM program assists organization to motivate employees towards the better productivity. The organization should focus on the development of employees through the international work programs which focus on the employees’ growth with the development of the business. The given set of international HRM refers to the set of objectives created in order to manage the human resource of the organization on an international level. It helps the organization to get a competitive advantage at international as well as national level. The same set of activities like recruitment, selection, training needs to be done on the international level and there are some other things too like global skills management and expatriate management. As stated by the Stahl, Mendenhall, and Oddou, (2012) it is revealed that three types of employees need to be handled by international human resource management are-

1. Home country employees- It refers to the employees belong to the home country or we can say the location where headquarter of the company is situated.
2. Host country employees- It refers to the location, where the subsidiary of the host country is located (Lawton, 2010)
3. Third country employees- There are the employees that do not belong from the home country as well as the host country but they are employed at any of the subsidiaries or headquarter of the company. (Bonhoeffer, 2015)

Functions of Human Resource Management

As per the views of Bonhoeffer, (2015) it is observed that for the better understanding of International Human Resource management, below are some features-

• Human resource planning- In this case, human resource planning should be done in an effective way as it is really difficult to implement Human resource strategies in host countries. They have the responsibility to create development opportunities for the managers. (Lawler and Boudreau, n.d.)
• Hiring workforce- Every place has a different culture and it is important to hire the employees who can easily mix with the culture of the organization. It is also necessary to maintain repatriation process.(Dickmann, Brewster and Sparrow, 2016)
• Training and development-There should be cross-cultural training and linguistic training to improve the understanding of the employees.
• Compensation- Pascale should be decided in accordance with the pay between Host Company, parent company, and third country people. (Doebeli, 2011)
• Performance management- Performance management principles should be similar and there should not be any contradiction between them. (Abraham, 2014)

As stated by the Dickmann, Brewster, and Sparrow, 2016) it is divulged that international HRM is not a simple thing as it has many complexities. There are some boundaries that are really difficult to cope up with. Therefore, with the expansion of business on the international level, there are several issues and complexity arises in managing the employees in the business. Some of the major issues and challenges faced by International Human Resource management are-

1. Compliance with international law- As stated by Jackson, (2014) it is revealed that every country has its different law, rules, and regulation and that is necessary to follow. When a company expand its business and convert it to a global marketplace then they hire employees from various diversities and culture. They have their different cultural and geographic backgrounds. When a person joins an organization, then he is also liable to fulfill the taxation and labor law requirements. So, International human resource management has the whole responsibility to let them know things need to be done. There are different laws like in Europe; it is mandatory o pay value-added tax. In the US, if any organization hires non-naturalized US citizen then they need to apply for work visas and send the whole information to the federal government. (O?zbilgin, 2005)Sometimes it becomes an issue for the people who are not that much educated or some IHRM who do not have clear knowledge about laws. These laws are really complex and sometimes it becomes difficult to implement the same. IHRM should have proper knowledge regarding the applicability of laws and implementation of the same in the organization. (Stahl, Mendenhall and Oddou, 2012)

1. Cultural Diversity- People working in global organizations belongs from different cultures and different diversities. Sometimes, it becomes an issue for IHRM to maintain and understand cultural diversity. There are new and different working styles and new ideas of the people belong to the different location. There are sometimes language issues too as they cannot understand each other’s language and it becomes difficult to communicate. Their social practices are also different. Sometimes people are not able to understand the views of others as they belong to different locations and culture and it creates disputes between them. In order to cope up with these situations, there should be cross- cultural communication. It helps people to understand art, culture, fiscal policies and literature and minimize the gap between different cultures. (Reiche et al., n.d.)

1. Benefits and Compensation- As per the views of Chung, 2018 it is reflected that Compensation refers to the monetary benefits given to the employees for working in the organization and benefits are some non-monetary things that are provided to the employees to satisfy them, make them happy and in order to maintain work-life balance in their lives. It is important to provide good salaries and benefits to the employees as they work for the organization and apply all the knowledge and skills for the growth of the organization. In the same way, they expect the organization to understand their feelings and concerns. The major difference between human resource management and international human resource management is to justify all the responsibilities and knowledge required for foreign operations. One of the concerns is regarding the benefits and compensation to be provided to the employees. Much organization should face challenges regarding management of work-life balance of the employees. They always try to provide such benefits that can help employees to maintain the work-life balance. They always try to develop such programs that can improve the personal as well as professional lives of the employees. It is a major part of international human resource management as many multinational companies have taken so many initiatives like flexible working hours, paternity leaves, crèche for children and many more. (Harzing and Pinnington, 2015)Some organizations were facing problems related to international holidays as people belong to different locations want leaves according to their occasions and festivals so it becomes really difficult to satisfy them in this concern.  (Pucik et al., 2017)
2. Training and Development- Training are an important part of an organization and it is important to provide timely training to the employees to cope up with the changes. It enhances their knowledge and skills that help in the achievement of the personal goals as well as organizational goals.  To cope up with this issue in case of international human resources, training, and professional development programs have been started. Training programs generally include seminars and meetings designed to provide on- the- job training to the employees that are really necessary for global business management. There are some cultural classes and language classes too. It enhances their professional skills. Sometimes they face challenges in providing training because there are different ways to provide training and due to global nature of employees and their nature of understanding.(DeCenzo, Robbins and Verhulst, 2013).
3. The diversity of the culture- As stated by Milkovich, G. (2014) it is divulged that HRM needs to overcome the diversity issues and challenges to set up an effective organizational culture. However, diversity in the business process will help in increasing the overall output of the organization. The diversity issues could be mitigated by HRM department by motivating employees towards the teamwork.
4. The increased cost of production- It is analyzed that if HRM department is indulged in the business process of the organization then it will increase the overall cost of the production of business due to the increased complexity and work process system of organization.
5. Labour relation- With the application of the HRM practices and strategies of the business, company working on international may face s issues related to labour management. HRM department needs to focus on the development ofeffective labour relation.
6. The arrangement of resources- HRM department indulges in several processes such as recruiting, selecting and staffing of employees. If HRM department does not take proper functions then it will increase the overall complexity of the management of the business.

As a result of increasing complexity of the business, there are several challenges developed which are given as below.

Conflict in domestic and international HRM policies- Organizations working on the international level need to analyse all the internal and external factors of the international market before setting organizational policies. It may be complex for the organization to establish harmonization in the domestic and international HRM policies.

Approaches to management of staffs- Management needs to adopt the decentralized management decision making to manage the employees in an efficient manner. However, proper management meeting will be conducted through the communication online portal to manage meeting program.

Culture differences- International HRM program can only persist if the company is MNC. Culture diversity is the foremost challenges which each and every international company faces in its value chain activities. The culture diversity arises due to the different values, belief, and perception of the employees in the organization.

There are some theories that help in the management of international workforce-

Leading the Talk- It is important for the HR manager to advocate a large workforce at the organizational level otherwise it can create demotivation for the employees and they will start thinking that they need to switch early. It is important to show respect for each diversity as it can help to motivate the employees. He should be responsible enough to behave equally with every employee and complete the ethical responsibilities (MACHADO, 2016). The motivation of employees could be done by using the proper reward program and incentives scheme. It will assist HRM of the organization to promote healthy and motivational work program for employees

Control- There should be the proper assessment of the performance of the employees and on regular things like the work environment, pays, benefits, management behavior, and promotion opportunities. It is also necessary to measure the initiatives for diversity management. These issues need to be taken care as it is important to manage people belong to different diversities (Maddux, 2006). This theory assists HRM management to control the labor turnover. It includes proper motivation, staffing and employees development program to mitigate the process employee’s issues in an effective manner.  

International Human Resource Management

Motivational approach- Motivation is really important for an organization as it helps to maintain the performance of the employees and they never feel disappointed. Motivational practices are really necessary as today many employees are facing from work-life balance issues so human resource department should take some initiatives to motivate the employees and create a sense of responsibility in them. It actually creates an influence to achieve organizational goals. Motivational needs vary from employee to employee due to diversity so firstly it needs to be identified and then take an approach to apply all the possible motivational tools. It enhances the productivity of the company. There are some basic things that motivate the employees like a good leave policy, proper work environment, flexibilities and benefits. (Rossouw and Van Vuuren, 2017) There should be incentives or rewards for the employees who worked really hard and there should be time to time performance appraisals. It is considered as the strongest motivational approach. This increases job satisfaction as well as the motivation of the employees. They feel comfortable and start putting their best efforts to compete with other employees. (Harzing and Pinnington, 2015)

Profit Sharing- As stated by Gomes, et al. (2015).  It is depicted that it basically refers to provide timely incentives to the employees or the incentive programs started by the companies. It is known that every organization has to put some efforts to improve the performance of the employees so to increase their regular compensation is one of them. Organizations started to provide annual or semiannual appraisals and increments in the compensation of the employees as they know that it will result in increased economic gains for the business. Some organization also gives the equity shares of the organization to the employees as gift or bonus to motivate them. It is also known as gain- sharing formula that helps organizations to make their employees work more effectively. (Davidson, 2012) This is the foremost employee’s development program. The company needs to set up nexus between employees development with the organization growth. It could be done by using the dip program, issue of employee’s stock options and other benefits programs.

Employee’s oriented culture- As per the views of Farndale, et al. (2017) it is reflected that after analyzing the international business program; it is observed that every employee in the organization has different work culture and perception. It is observed that company needs to focus on the development of the employee’s oriented culture. It will assist the organization to set up new plan and program to assist the organizational development program. It will not only increase the overall output of the business but also help HRM department to establish an effective motivational program for its employees.

Challenges Faced by International Human Resource Management

Development of standards HRM policies- As stated by Dickmann, Brewster, and Sparrow, (2016), it is revealed that company needs to manage proper HRM policies and program for employees. It will work as role path for their work and motivation programs. Each and every international company needs to focus on management of employees development program and motivating employees towards standards HRM policies and work program for their better work management program. Nonetheless, the HRM policies and program should be arranged in such a way which motivates employees to perform efficiently in the work process system.

As per the views of Harzing, and Pinnington, (2015) it is reflected that international HRM practices should not only focus on recruiting, selecting and motivating employees but also align employee’s interest with the growth of the organization. There are several factors such as political, social, legal and economical which may affect the international policies program. It is evaluated that HRM practices of the organization should endeavor towards complying with the all the applicable rules of employment program of the host country. It will assist the organization to mitigate the possible recruiting, selecting and motivating employee’s issues in determined approach.

Conclusion

With the expansion of organizations globally, there is an increase in the transmission of human resources from one place to another. They use to work in other countries. Global organizations are making higher profits but at the same time, they are facing some issues and challenges in managing human resources belong to different culture and geography. It has become a major task to manage international human resources as there are contain perspectives that vary from country to country (Milkovich, 2014). There are many issues that companies are facing. It is not an easy task to manage various employees belong to different geographies at the same time. They need to be managed in a proper way too because they are responsible for the growth and the success of the organization. The key issues are like managing training and development, compensation and benefits, law compliances and cultural diversities. There are ways to manage it but for the same, there should be proper knowledge to the owner and human resource management department of the organization. Like applicability of correct law is not an easy task and it needs the wide knowledge of laws and regulation so human resource manager should possess the knowledge. When an organization gets success in managing International human resources then it can easily achieve their goals and objectives.

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