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HRM is important part of strategic management which focused on development of human resource by empowering them and leads to the organisational growth. This approach is both human resource and organisational growth centric. International HRM is a terminology which is adopted by organisations established in different countries to manage the human resource in effective manner by adopting a unanimous approach. This report will discuss and explain about the importance IHRM plays with the integration in the organisational strategies to be applicable in MNC’s to enhance growth of human resource and organisation both.With the impact of globalisation it becomes easy to expand business in different countries and employee people from different countries and cultures having skills and specialisation. But there also emerges some challenges while applying IHRM in the organisational strategies which are also elaborated in this report.
International Human Resource Management
Globalisation influenced the business trends and reduces barriers to trade internationally by eliminating boundaries of countries which is helping in expanding companies and organisations in other countries. These companies are called as Multi-National Companies and employing human resource of different countries and having different culture and skills. It is important to manage workforce in these MNC’s to ensure growth of the company and empowerment of these employees. IHRM is an approach to manage workforce or human resource on international level to ensure effectiveness in achieving goals and objectives of organisation and develop competitive advantage to stand with unique position in market over its competitors. IHRM includes several functions to enhance the performance of human resource of company like human resource planning, recruitment and selection, training and development, compensation and performance appraisal etc. (Tarique, et. al 2016).In the process of effective IHRM employees are provided training and development programs are given to employees to improve their level of performance like global skills management program.In the process of IHRM there are managed three types of employees which are as follows.
- Domestic employees- Employees of the country the company is originally located as in its head quarter is situated there. These employees are also called as domestic employees.
- Host country employees- These are the employees working in the country where the subsidiary company is situated.
- International or global employees- These are the employees working in the third country which can be anywhere in the globe where company is having its business.
Nature of IHRM-
IHRM is global approach to manage the human resource to achieve goals and objectives by applying effective business ideas and enhancing performance of workforce in all around the globe.Nature of IHRM defines that it is competitive approach around the world and pervasive in nature as in it is used and adopted by every multinational company in the world to develop competitive advantage in the company (Tarique, et. al 2016). IHRM is efficient and effective to manage workforce to achieve goals and objectives of organization internationally. The process of international HRM is dynamic and can be altered according to the requirement of situation and also adoptable within a specified and shortest time period by the organization.It is required to transfer different learning and new methodologies to all the parts of organization, IHRM enables to adopt and transfer these learning around the globe through training human resource in organisation.The nature of IHRM is to achieve organisational growth by motivating employees and empowering them, so it is basically employee and organisation both centric.
Functions of International HRM-
IHRM is a pervasive approach of improving organisational goals by empowering human resource within the MNC’s. The following are functions of IHRM-
- Effective Human resource management: The main function of IHRM is to manage human resource and develop effective workforce which leads to achieve the organisational goals and objectives.Due to impacts of globalisation it is important to build diversified workforce which can execute every activity with efficiency understanding impacts of global competition. There are executing the following programs for building effective human resource in organisation (Welch, et. al 2015).
- Recruitment and selection: Staffing is the primary function of HRM in which human resource planning is done to estimating demand of human resource and selecting and deciding techniques and tools for the whole process of HRM. Recruitment is the process of attracting potential candidates and applicants by using different sources internal and external, like advertising on websites and newspapers. Selection can be defined as the most suitable candidate from all the applicants by testing them using various techniques and tools.
- Compensation and incentives: Compensation is the value of efforts made by employee in the organisation. There are various standards and methods which can be used to decide compensation on global level which is defined by the process of IHRM.
- Training and development: There are required variety of skills and specialisation which should be there in employees to work effectively to achieve organisational goals and objectives. These training and development programs are making workforce more effective and efficient (Welch, et. al 2015).
- Application if tasks: In the process of IHRM it is assured that allocation of tasks is done effectively by considering the ability and capability of employees.
- Due Diligence: Level of legal compliance is ensured in the process of managing the activities through controlling and monitoring efforts and performance of human resource in organisation. It helps in removing chances of any prosecution on global level.
- Redesigning organisational structure: IHRM is changing approach of traditional hierarchal structure into modern flat structure of organisation which is helping in effectively managing the employees on global level (Sparrow, 2012).
Organisational Strategies in Multinational companies-
Multinational companies are having their businesses in different countries around the world and adopting different strategies which help in achieving the goals and objectives in effective manner.Organisational strategies are the path and framework followed by organisations to achieve long term goals and objectives of the organisation. These strategies support activities of organisation in the growth process.Organisational strategies like setting structure and culture of organisation by analysing different factors and features which makes effect on the decision for selecting a strategy (Regnér, et. al 2011).
Integration between IHRM and Organisational strategies in Multinational companies-
Multinational companies are diversified within various countries and keep making efforts for establishing their businesses in more countries and expand their business around the globe.For this purpose these companies have to integrate their chosen organisational strategies with the international HRM to ensure growth of the company.For understanding this integration process we will take example of different organisational strategy and importance of IHRM on effectiveness of these strategies (Regnér, et. al 2011).
- Expansion strategy: Expansion is used by multinational companies to expand their businesses and adopting IHRM helps in managing effective level of performance.Expansion strategy can be defined as decisions taken for expanding business. In case on multinational company expansion can be treated as making business place and establishing organisation in more countries to increase the reach of the organisation. IHRM plays effective role in the process of adopting expansion strategy by multinational company. Role of IHRM in expansion strategy can be explained as follows.
- Human resource planning: While adopting expansion strategy in the organisation there comes requirement of planning of human resource in the organisation which should be managed effectively. By planning human resource a framework is provided to be followed to effectively manage human resource in which estimate is made by analysing internal and external factors which defined requirement of workforce which is required to run the organisation. This estimation helps in identifying demand by which equilibrium can be made between demand and supply. Different techniques and methods are selected which will be used in the process of HRM (Bach, et. al 2013).
- Orientation programs: While establishing organisation in different country and staffing employees, orientation is provided to the employees to let them know about the organisation and its culture and working patterns and make them comfortable with the organisational environment and structure.
- Development of global skills: While working in a multinational company it is required to develop some specified skills to compete in global market. IHRM supports development of employees by developing different skills which help in empowering employees by improving their performance level. There are arranged and provided different programs to develop employees and ensure effectiveness of the expansion strategy.
- Redesigning organisational structure: While expanding business the organisational structure and level of hierarchy plays important role and organisational structure ensures all the activities and importance of employees in decision making. IHRM helps in eliminating traditional hierarchal level and develops modern approach in which there is ensured contribution of employees which help in motivating them and enhance their involvement in the company.
- Adopting changes and learning: In this changing it is important to change according to the needs and requirement of situation on global level. IHRM helps in transferring these changes and learning from country to country and ensures effectiveness of the new expansion (Bach, et. al 2013).
- Product marketing strategies: Organisational strategies include product marketing strategies which used for promoting the products and services of the company.In the process of marketing and branding products and services in the international market IHRM is adopted by organisations to ensure the effectiveness of marketing strategy. Different techniques and methods which are useful for doing effective promotions in international market IHRM is important tool in which different cultures, languages, and customs and beliefs are identified and policies are made considering them.
Importance of integration of IHRM with organisational strategies in multinational companies-
- Develop and train employees on global level which provides speed to organisational growth by achieving goals and objectives of MNC’s.
- IHRM also plays the role of expatriate management in any MNC’s and has improved level of management and redesigned organisational structure.
- It is dynamic and flexible approach which enables adopting changes and increases certainty in the organisation towards any consequences (Maley, 2011).
- Human resource is clear with goals and objectives of the organisation and also helps in motivating the employees to execute organisational strategies effectively.
- Competitive advantage and core competency is developed by effective management of human resource on international level.
Challenges of integration of IHRM with organisational strategies in multinational companies-
- Organisational strategies of multinational company are influenced by the International HRM and its functions in which expatriate management plays important role.
- There come problem of lack of coordination between global and local management of human resource in organisation.
- Geographic, demographic, social and cultural changes can be barriers sometimes in the process of IHRM (Zhao, et. al 2015).
- Lack of effective information channel can be problem of this integrated process of IHRM and organisational strategies.
- Main challenge can be different labour laws, political climates, technological changes and values and beliefs.
- Different religions, cultural aspects, languages and perspectivetowards their work and their taboos which can be called as cultural and environmental diversity.
- Diversity in the international organisational model can also be a challenge in effectiveness of IHRM on the organisational strategies (Harris, et. al 2013).
Conclusion and recommendation
In this report we have studied about IHRM, its nature and functions in an organisation. Organisational strategies in multinational company are also discussed in the report. An integrated process of IHRM and organisational strategy in multinational company is analysed. As in we have understand that with the impact of globalisation it becomes easy for the companies to enter in different countries and establish their businesses there. International HRM helps in managing workforce of the expanded businesses. Expatriate management is also provided by IHRM. In effectively executing and adopting any organisational strategy IHRM gives its support. As a conclusion of this report we can state that this integrated process is beneficial and helping MNCs in developing competitive advantage and improving growth of the organisation. There are importances and challenges emerging in this integrated process so there are some recommendations also there in which effective training and development program is provided to employees to develop global skills and specialisation which can help in stand in global market (Harris, et. al 2013).Diversified cultural and legal environment is effective understood to improve the approach of managing human resource of global level.International business models should be analysed before managing and deciding the policies and methods of IHRM. Technologicalup gradation and use of effective tools should be there to improve the flow of communication and make clear goals and objectives of the company to the workforce.
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