What Role Do Hrm Practices Play in a Business Decision to Expand Internationally?
What Role Do HRM Practices Play In A Business Decision To Expand Internationally? Ilein Arteaga 2608214 Florida International University HRM CONTRIBUTIONS TO INTERNATIONAL EXPANSION OF BUSINESS Human Resource practices play a great role in the international expansion of businesses.With globalization being the current trend in businesses all over the world, success of international business units depends heavily on the effective performance of the Human Resource department (Edwards & Rees, 2006).
Globalization or the international expansion of business involves the integration of an organization`s operations, business processes and strategies into diverse cultures, ideas, products and services.Business operations transverse regional and geographical boundaries, while having to deal with diverse cultures in their area of operation; ranging from customer relation to recruitment of employees (Edwards & Rees, 2006).
Transnational businesses have to also strategically deal with their foreign markets which involves understanding concepts of multi-culturalism which can be effectively handled by the Human Resource Management.
Most importantly however, is the role of Human Resource Management in cultural sensitivity that will determine the success of a business beyond its borders (Jackson, Schuler & Werner, 2012). Human Resource planning is essential in the success of any business.
HR planning is the strategic process of forecasting future human resource needs of an organization, and ensuring that structures are established to align these needs with the goals that a business envisions to achieve. This process is especially important in the international expansion of businesses, as the success of a business is highly dependent on this management of this resource (employees). This critical practice of HR management will ensure an organization is equipped with accurate information and data on human resource before it ventures into any foreign markets or fields.
HR planning will also ensure correct information on projections in terms of employee turn over is available to avoid future surpluses of deficits in the workforce of an organization (Jackson, Schuler & Werner, 2012). All these information that is gathered through the process of HR Planning is imperative to a business that is deciding to embark on the process of globalization, or operating beyond its geographical or cultural borders. Recruitment and selection are other roles of HRM that are significant in a business’ decision to venture into international markets and operations.
Transnational business translates into incorporation of a larger workforce in the business operations due to the expanded magnitude operations (Ervin & Smith, 2008). This calls for recruitment and selection of new employees to facilitate the expanded scope of operations. The HR practice of recruitment and selection is important in a business’ decision to venture into international markets. Expansion of a business into international markets requires full knowledge of the culture in the host country/region.
Culture and perspective of people in the new markets is imperative to understand, as it would govern the processes of recruitment (Ervin & Smith, 2008). A good example is a nation where people frequently read the dailies and newspapers. This would direct the advertising of recruitment in the dailies. The perspective of people in the host country should also be taken into account to ensure this HR practice is aligned to their culture. Understanding of the host country`s culture and perspective is imperative in conducting a credible and efficient recruitment and selection process.
The other equally important HR practice in deciding on international expansion of business is the training and development role in HR. Before a business decides to embark on international markets, it has to consider the possibility of training either newly recruited staff in the new markets, or similarly, training expatriates to work in the new markets (Evans, Doz & Laurent, 1989). There is a high possibility of businesses to fail in newly ventured markets if its operations do not match up to that of its competitors.
To maintain competitive advantage in new markets, a business must ensure it offers quality services and products that either match or surpass the standards in the newly ventured markets. This can be maintained through continuous training and developing the organization`s workforce. Training will inculcate the right job attitudes, skills and knowledge that will ensure effective and efficient job performance; an attribute that will enhance a business’ chance of success in international markets.
Performance appraisal is yet another HR practice that plays an important role in determining the viability of a business venturing into international markets. However small the connection may seem between these two factors, the impact of performance appraisal largely determines the consistency of a business’ performance. Performance appraisal is the structural check against which the performance of an organization`s workforce is weighed and rewarded. Performance appraisal should significantly take into account the working culture of the market it is operating in (Edwards & Rees, 2006).
This is important as people from different cultures are motivated by different factors. Some cultures value wage increment as motivational factors whereas others value job promotions and recognition more. Performance appraisal should consider such cultural factors before establishing ways on how to reward employees. An efficient performance appraisal will ensure that employees are constantly working towards exemplary performance, as they know their efforts will be awarded.
Performance appraisals that are fair, transparent and in line with employees’ expectations; will see the rise in productivity of a business` operations. The rewarding system established by an organization is also important in determining the success of a business in foreign markets. Different countries in the world have different rates of inflation and standard remuneration. These factors should be taken into effect as they greatly influence the performance of employees in an organization.
Remuneration is a sensitive factor in HRM as extremes on either side may lead to high unhealthy turnover for an organization (Jackson, Schuler & Werner, 2012). High remunerations that are above average in the country of operation may build employees wealth to limits that make them leave their workplaces, on the contrary, meager salaries may result to turnover as employees seek greener pastures. It is therefore imperative that any organization that wishes to expand into international markets to consider the remuneration average in their countries of operation.
Other HR practices that need to be considered before a business ventures into international markets include: management development, quality management, and compliance management (Evans, Doz & Laurent, 1989). The management of an organization venturing into international markets should be ready to streamline its operations to thrive profitably in its market of operation. Most importantly however, the management should adapt a global culture of professionalism that ensures expatriates and employees from the home country work in harmony.
The international business should have managers who are focused to ‘think globally, but act locally”. This is a sure-way policy that will rocket any international business into success (Jackson, Schuler & Werner, 2012). Compliance management is the other HRM practice that is equally important in the consideration of venturing into international business. Different countries have different business compliance laws that must be adhered to if a business is to maintain its legal jurisdiction in its area of operation.
Laws relating to the quality threshold of production, taxes, employee welfare among others should be taken into effect. It is also important for a business to recognize what operations are deemed legal or illegal in its host country to avoid legal tussles (Evans, Doz & Laurent, 1989). From the above, it is clearly evident that HRM practices play a significant role in determining the globalization of a business. It is therefore essential that before businesses embark onto international businesses, they should take into account global factors that will ensure its ascent to success.
Edwards, T. , & Rees, C. (2006). International human resource management: Globalization, national systems and multinational companies. Harlow: Financial Times/Prentice Hall. Ervin, J. , & Smith, Z. A. (2008). Globalization: A reference handbook. Santa Barbara, Calif: ABC-CLIO. Evans, P. , Doz, Y. L. , & Laurent, A. (1989). Human resource management in international firms. Macmillan. Jackson, S. E. , Schuler, R. S. , & Werner, S. (2012). Managing human resources. Mason, Ohio: South Western cengage learning.