Essay on International Human Resource Management

• Compare and contrast the role of HRM departments in your country and one other you know about, critically appraising the impact on firm competitiveness.

Canada and the US are neighbouring countries, and both adopt similar and also different human resource practices. Canada is more progressive in its human resource policies than the US. For instance, work/life balance has been an issue in the US for years, whereby employees report high instances of burnout. However, the issue has been increasingly common in Canada, but approximately 7 of 10 Canadians report they can balance their life and work well. Unlike the US, at-will employment is not practiced by Canadian employers (Skrzypinski, 2018). Employers in the US can terminate any employees without reason and warning as long as that decision does not compromise factors protected by law such as race, gender, or age. On the contrary, employment in Canada is governed by agreements that grant employees right concerning termination. Nearly 90% of the workforce in Canada is monitored by provincial governments. Employment and labour matters are regulated by each province in their own ways. The other 10% is regulated by the federal government. There is no National Labor Relations Board in Canada overseeing the country’s unionized workforce, unlike in the US.

In the US, maternity leave changes by state and periods are shorted than provided in Canada. Canadian employees are entitled to up to one year of maternity leave for the mother or the father. Canada offers competitive pay whereby there is lower variation between the top and bottom levels. In the US, low to mid-management receive a lower pay as opposed to high management level where compensation is quite higher. Both countries support labour unions where workers can form trade unions to further their interests (Skrzypinski, 2018). In Canada, trade unions are regulated by provincial and federal legislation, whereas in the US, they are managed by National Labor Relations Board.

• How useful is the concept of `dominance’ effects? Explain.

In the debate concerning standardization versus localization, the standardization concept has been primarily understood as standardization of multinational corporations’ management practices around practices adopted by the head office and thus regularly replicate the particular patterns of the head office home country. However, subsidiaries can also adopt management practices based on the best practices established by a country, a practice generally known as the dominance effect. Countries may be given the dominant status due to their robust economic performance, such as Germany, Japan, and the US since they are seen as role models in developing global best practices. Thus, the dominance effect is helpful to countries that possess the status as they act as the controlling parties (Pudelko & Harzing, 2007). For instance, the US has the dominant status and can therefore influence global practices and trends. If a country’s practices are standards, it becomes easier for others to implement practices in foreign countries and may not face significant challenges compared to other companies.

With increased competition globally, the need for best practice knowledge has increased. As a result, this gives power to countries that have dominance status, in this case, the US. The dominance status has rotated between Japan, Germany, and the US in the past 50-60 years. When each nation held the dominant status, management styles and HRM shifts were noticed (Sebastian Reiche, Harzing, & Tenzer, 2018). Currently, the US holds the dominant status and can develop influential practices globally. However, the dominance effect has its drawbacks since it assumes the existence of marked differences in economic growth among developed economies. Thus, for the dominating country, the dominance effect is intensely fundamental, but other nations should understand that the divergence may not be that significant.

• What are the top ranked factors contributing to acquisition success according to well-known surveys and reports?

Surveys and reports identify retention of key talents as the top contributing factor to a successful acquisition. 76% of responding companies outstanding talents since competent individuals are essential in making informed business decisions. Besides, the pooling of ideas and efforts from the best talents are fundamental in project success. Key talents can work effectively as teams and stay committed as well as handling tasks professionally to meet organizational goals. 71% of firms believe effective communication is also fundamental. Ensuring open communication enhances effectiveness and ensures the team can acquire appropriate information and seek clarity whenever the need arises (Sebastian Reiche et al., 2018). Besides, information supports the decision-making process by ensuring the team has adequate information. Executive retention has been identified by 67% by surveys and reports. Acquiring companies need to retain executives since they need their intellectual capital. Such executives have already established relationships with various stakeholders like suppliers and customers, which is required to continue operating effectively.

About 51% of responding firms identified cultural integration among key factors in acquisition success. Culture has a vital impact on leadership styles and overall decision-making. Conventional wisdom infers that 50-70% of acquisitions do not deliver enhanced value to shareholders, and among the unsuccessful acquisitions, 85% fail because of cultural issues. For successful acquisitions, companies should understand the fundamental concept of cultural integration. Addressing cultural integration proactively helps companies attain their vision and join other 50% of firms that have managed to deliver the expected shareholder value supported by cultural integration. Other notable factors include developing a proper risk management plan to ensure risks are mitigated whenever they arise or an existing course of action is already in place. Furthermore, comprehensive planning is a key factor for acquisition success as it helps firms comprehend everything from start to end.

• Why is it important for MNCs to develop compensation and benefits policies that result in fair processes and outcomes?

Human resource managers in multinational corporations participate in almost every process of pay-related decisions. They focus on primary areas such as managing highly sophisticated and turbulent local details whereas developing and maintaining an integrated, strategic pattern of compensation values, practices, and policies. For multinational corporations to manage compensation and benefits in foreign countries, they need to successfully understand local taxation laws, employment practices and regulations, environmental laws, and customs (Sebastian Reiche et al., 2018). Besides, understanding economic variables such as the effects of inflation and currency fluctuations on compensation is vital, as well as shifting patterns in social, economic, and political conditions. When establishing international compensation policies, MNCs strive to meet various goals like consistency with overall organizational policies and aims to attract and retain personnel. Compensation policies should thus be competitive to attain different organizational benefits.

The modern business world is highly competitive, and MNCs need to develop a compensation package that seeks to retain the best talents globally. Smart employers recognize the benefits of keeping quality employees through well-structured compensation and benefits packages. Usually, compensation entails commission structures, bonuses, salaries, and wages. Besides attracting the best talents, compensation policies that ensure fair processes and outcomes enhance employee motivation. Such policies show that MNCs value their personnel which boosts their morale and, in turn, productivity and profitability. When employees are compensated well, their loyalty to the company also increases, implying firms do not need to spend funds and time hiring new employees. Low turnover rates and employee retention are essential for employers to develop an effective and well-motivated team. Right compensation policies enhance job satisfaction since firms invest in the employees’ work, and in response, employees work towards the attainment of organizational goals since their efforts would be rewarded. Furthermore, the right compensation policies ensure adherence to the host country’s employment regulations which minimizes conflicts with the regulatory framework.

References

Pudelko, M., & Harzing, A. W. (2007). Country‐of‐origin, localization, or dominance effect? An empirical investigation of HRM practices in foreign subsidiaries. Human Resource Management: Published in Cooperation with the School of Business Administration, The University of Michigan and in alliance with the Society of Human Resources Management, 46(4), 535-559.

Sebastian Reiche, B., Harzing, A. W., & Tenzer, H. (2018). International Human Resource Management.

Skrzypinski, C. (2018). 5 Ways HR in Canada Is Different. SHRM. Retrieved 24 June 2021, from https://www.shrm.org/hr-today/news/hr-magazine/0618/pages/5-ways-hr-in-canada-is-different.aspx.