Last Updated 27 Jul 2020

The strategic role of international HRM

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The transition from a centrally planned economy to a socialist market economy has resulted in significant changes in the economic system, which is and will continue to have major implications for the practice of human resource management (Schuler, 1989). Moreover, as Williams (1993) notes, the role which China is playing as a global economic power is beginning to influence the emergent pattern of world business.

These changes necessitate an appreciation and understanding of the different HRM practices under planned and market economic systems, the impact of the changing economic system upon present HRM practices and the implications of such a change for future trends in HRM for China. This will also have practical value for both Chinese managers and Western managers who currently have operations in the country. The reforms affect the human resource management and management as a whole.

The Chinese have started elaborate methods of assessing management and leadership skills which are not common in Eastern Europe. Most cadres in Chinese enterprises are either elected or selected through some open and democratic procedures. It is now easier for Multinational Corporation to thrive in China since the economy and the country itself is welcoming investors and is applying 6 new systems thus, the emergence and transfer of more investors and manufacturing industries from nearby Asian countries to China due to a more friendly business environment as well as low labor cost.

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Since China is still in the process of opening up the country to investors and still adjusting to change, the best human resource is a cross breed of ethnocentric and polycentric approach where employment opportunities are open for both citizens and foreign nationals. The geocentric approach tends to reduce cultural myopia and to enhance local responsiveness. Thus, other things being equal, a geo¬centric staffing policy seems the most attractive. In India, the liberalization of policies has a significant implication in Human Resource Management.

In order to compete with multinational companies, they upgraded their technology and considered developing their workforce into well-trained, highly skilled individuals. The Indian firms upgraded their technology in order to match the multinational enterprises. Indian firms are now under great pressure to change from traditional, costly and low technology to a high, more effective one. There is a need to improve the infrastructure and the bureaucracy in the operating level and cultural organization.

More policies that will lead to capital-intensive from labor-intensive production methods of production need to be done resulting to loss of employment for many thus a need to generate new sustainable employment. Indian firms are attempting to be globally competitive and match world standards such as ISO9000. Their goal is to increase productivity, generate employment, improve quality, downsize surplus labor and reduce cost. The corporate management changed from regulation driven to market driven, from protection to competition.

Liberalization paved a way and challenge existing and traditional practices and technology for the betterment of India’s economy. The Indian firms which upgraded their technology now compete against multinational companies. Organizations need to develop highly skilled, efficient and motivated employees in order to cope with the demand for well-trained 7 workers. The faster business organizations and firms modernize plants and use new technology the more successful they will be. Also read 

Strategic Role of Human Resource Management essay

The HR’s function is to develop a constant awareness of mission, enhance innovation, train, motivate and improve the compensation schemes and develop better employee relations. Since these economic reforms, India’s economy responded positively. In fact, India is now considered one of the emerging economies in Asia. More investors are coming seeing its potential. It has survived in the 1997 Asian financial crisis. World Bank forecasts that in 2020, India will be the fourth largest economy in the world.

The past years, more improvements are seen in telecommunications, financial and shipping sectors mostly brought by multinational enterprises since state control and ownership in the economy was reduced. This attracted more foreign direct investments in the country. Multinational corporations should share and transfer the technology to India in order to succeed in their business ventures. The Indian workforce is big but needs advanced technology and training. India is still far behind the more advanced Asian economies and human resource development is seen as a key to success.

Since the traditional human resource management system developed over a very long time, it will take some time to change. HRM is playing an important role in bringing about change in Indian organizations. Thus, the human resource management approach which will work best in India would be the ethnocentric staffing policy in which all key management positions are filled by parent-country nationals. All important positions were to be held by parent-country nationals in order to transfer core competencies to India business operation. Knowledge underlying a core competency cannot easily be articulated and written down.

Such knowledge often has a significant tacit dimension; it is acquired through experience. References: Hill, Charles W. L. 2005. International Business: Competing in the Global Market Place. New York: McGraw-Hill/Irwin Cooke, Fang Lee. "Ownership Change and Reshaping of Employment Relations in China: A Study of Two Manufacturing Companies" .

The Journal of Industrial Relations, Vol. 44, pp. 19-39, 2002 Tayeb, Monir H. ,2005. International Human Resource Management: A Multinational Company Perspective. Oxford Poole, Michael. 2002. Human Resource Management: Critical Perspectives in Business and Management, pp.107-108 Budhwar, Pawan S. , Debrah, Yaw A. 2001 Human Resource Management in Developing Countries, pp. 75-78 Hansen, Gary B.

‘A guide to worker displacement: Some tools for reducing the impact on workers, communities and enterprises’, International Labor Office, [Online] Available at: http://www. ilo. org/, pp. 7-53 Country Reports on Human Rights Practices, 1995, Available at http://www. state. gov/ Morishima, Motohiro, 1997, Changes in Japanese Human Resource Management: A Demand-Side Story, Vol. 36-No. 11 November 1,1997, Available at: http://www. jil. go. jp.

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