International Human Resource Management, Research Paper Example

The Importance of the Subject

In asking if International Human Resource Management (IHRM) is important, the question actually is one of degree. The subject itself clearly must impact on all societies and nations concerned with its application; it goes to the livelihoods of the citizens involved and the foundations of the well-being of each nation’s commerce. The real question to be addressed, then, is how substantial  IHRM is as an element of global interactions, along with an inherently necessary examination of the factors that contribute to its import. For our purposes here, the United States serves as an excellent model, as one of the most significantly active and influential industry leaders in the world. Moreover, the differing cultural factors between the U.S. and other nations should provide additional insights.

Methodology

In seeking to answer this sizable question,  it will be valuable to look back upon the evolution of this particular field, both in assessing obstacles overcome in the past and in projecting potential dilemmas to come. Then, a variety of current documentations on real applications of human resource activity from the United States on a world-wide level is essential; no real importance can be attached to the subject without a valid sense of how it is genuinely at play in the world today. Also, as multicultural considerations are very much the at the heart of successful IHRM, examining the varied elements of such considerations, both past and present, can serve to illustrate better the subject’s import in perhaps less expected areas, as well as to identify possible issues forthcoming.

Investigating International Human Resource Management

In a very real sense, IHRM has been in operation since the first company ever staked an industrial claim in any foreign territory. The work itself may have gone by other names and been applied in only the most primitive fashions but, successful or not, it was happening. Not unexpectedly, the United States was in the forefront of industrial expansion.

It must be initially understood that IHRM as an actual object of study and recognized component in business is a relatively new field. “Although the coining and spreading of the term  (IHRM)  took place only in the late 1980’s and early 1990’s, the history…arguably covers a time span of some thirty years” (Stahl, Bjorkman 1). It was, as noted, occurring in the past, but had not yet evolved to a state wherein its potential was recognized or yet developed.

An outstanding model for a look at the genesis of IHRM as undertaken by the United States in early days would be the Coca-Cola company. This monolithic corporation, originally and still based in the U.S., was among the first to take advantage of the business expansion opportunities afforded by World War II. Simply put, American soldiers wanted Coke, it was desirable for the company to maintain its visibly patriotic stance and supply it, and the easiest way to do so was to open plants in other nations. In so doing, Coke sensibly strategized a further and enormous advantage; the brand would be embraced worldwide and their overseas operations would thrive long after the war’s end, as they have. “Coca-Cola and its subsidiaries employ nearly 30,000 people worldwide…in nearly 200 countries around the world” (Tuleja, O’Rourke IV 91). So it can be seen that, long before communication giants like Microsoft made technology an association in the public mind with international business, the American soft-drink empire was leading the charge.

Clearly, multicultural issues unforeseen and/or seemingly insoluble presented themselves with the first corporate plants opening on foreign soil. Setting aside both the iconic “all-American” aspect of the company and the additional, potentially conflicting issues inherent in the wartime scenario, Coca-Cola had to confront the same problems at the heart of IHRM today. Somehow, work forces with vastly different cultural backgrounds had to be integrated in as seamless a way as possible.

The primary function of HR, no matter where it is conducted, is to facilitate the best possible working environment for the good of the company and the workers. This is evidently subject, then, to standards and expectations of what is desirable. On a known ground, such as the native country, these are relatively obvious commodities. An American Coca-Cola bottling plant in Italy, however, must both confront and successfully integrate the societal standards operating there. Acceptable durations of work shifts, benefits, health plans and compensation issues immediately come to mind as most pivotal, yet even the factor of personal behavior at the workplace is largely dictated by culture. Coca-Cola, in the mid-twentieth century, had to find the means to blend all of this into their American model of a successful enterprise.

As simply stated, “Cultural differences are often hidden and are certainly the most difficult to quantify” (Rugman, Brewer 504). This, Coke learned. A wholly unfamiliar and mystifying array of issues presented themselves, and not immediately. Italian employees would seem to be agreeable when placed under the management of a supervisor, but the company would not understand for some time that the disturbing lack of initiative, or even productivity, from these employees was due to a cultural bias: the manager in question was younger than themselves and this bred an innate and culturally-fueled mistrust.

Moreover, the company was forced to realize that a true integration of the disparate cultures was essential, and had to be one with no conspicuous condescension evinced on the part of the employer. The era was different and American chauvinism more overt; it was not unnatural for the American management to, albeit unintentionally, exhibit attitudes offensive to their Italian labor force. Everything was a learning process for the company. Fortunately, Coca-Cola was a fast learner: even in those early days, “…as far as possible, (Coca-Cola) tries to staff its (international) operations with local personnel. The belief held by the company is that local people are better equipped to do business at their home locations” (Aswathappa 575). In short order Coke learned as well that this policy was just as efficacious, if not more so, when applied to management in their overseas plants.

As stated, however, the IHRM issues facing a company like Coca-Cola in the 1940’s are still very much present in today’s international markets. As the leading super-power, the United States is both best placed to resolve these issues and obligated to set a standard in IHRM policies for other nations. Also as stated, these issues cover an immense rage. In examining several key ones, the irrefutable import of IHRM becomes more evident.

Compensation may be the most readily identifiable factor, as regards multicultural business activity. It is certainly universal; no business anywhere functions without providing payment to its people that is, even at its most minimal extent, acceptable to them. In this arena of IHRM, international differences in standards of living and subsequent wage expectations are crucial components, and subject to exploitation.

Industry in the United States enjoys an unchallenged reputation as that of applying the highest standards in compensation. The necessary comparison elevating these standards is of course with how industries in other nations compensate their workers, which both depends upon and directly affects governmental regulations in regard to the same. The reality, nonetheless, is both simple and extreme: other countries, by and large, do not pay their workers as the U.S. does. How, then, is the U.S. company opening branches overseas to determine the best course?

The obvious solution, and one embraced by many globally expanding American industries, is to do some IHRM homework first. “When a company globalizes, it appears advisable to examine the prevailing cultural values and to at least attempt to tailor the compensation package to it” (Gannon 224). This strategy, however, is more precarious than it may first appear. Considerations beyond the company’s own concerns must come into play, for any substantial new business in a foreign city is going to have a strong impact on the economic life of that city, both in regard to the employment now offered and the wages now in the hands of its citizens.

Company A, for instance, may decide to pay their employees in New Delhi a wage unprecedented in that city because Company A believes that U.S. compensation standards should apply wherever this U.S. firm operates. These laudable intentions, however, may severely disrupt the economic culture so enabled. Company A is not taking into account that, in New Delhi, earnings are synonymous with a caste system still very much in operation, and the increased compensation is causing drastic rifts within the social fabric of the city. “Social factors, such as the extent to which pay differences are considered acceptable, the appreciation of different forms of pay…also affect international business compensation systems…” (Sims 93). The United States company venturing into international trade must recognize its responsibilities in this arena. Its HR department faces a responsibility from which it is free at home; that of learning and understanding how compensation is both allotted and, perhaps more importantly, used and perceived within the new culture.

As complex as the issues surrounding IHRM and compensation are, so too do a variety of other cultural factors inevitably present challenges. In United States business overseas, the issue of work ethic as perceived by the foreign culture is particularly of import. Generally speaking, the American work ethic as traditionally held is vastly removed from that of most other nations. “Americans have not only worked more than other peoples, but they have found satisfaction in and identified themselves in their work more than others have” (Huntington 72). This deeply ingrained belief system is integral to American society. It is also usually at variance with how other cultures feel about the work they do: “Europeans work fewer hours, take more holidays, enjoy a greater variety of benefits than is the case anywhere else in the world, and are more inclined to work to live rather than to live to work” (McCormick 141).

With vast numbers of American businesses with European branches in operation, this single and fundamental cultural disparity demands an equally potent IHRM response, and one that must be adapted to the work ethic of each relevant nation. It is not merely desirable from a business standpoint, as Coca-Cola realized some time ago, to staff the overseas enterprise with indigenous workers; it is necessary. Strictly speaking, it is unrealistic in any way to attempt to employ only Americans in global extensions of a U.S. industry, and even in management spheres alone. Modern American business expansion is such that, the localities apart from the consideration, the volume of employees needed surpasses what each industry could possibly glean from the United States population.

Here again is the importance of IHRM strikingly evident. This is not a department within a company that serves merely to orchestrate pay, maintain employee paperwork and files, and deal with hiring and termination matters. IHRM, in this arena, must recognize how this new type of employee in the foreign country has an appreciably different viewpoint in regard to his work, and that American standards of what are expected output levels do not apply. Because of this, IHRM is far more obligated to work in concert with other management departments than it would be in an isolated, U.S. setting. The workforce anywhere is essential to the company’s success, but fundamental differences in how that workforce performs, which must be the result of global expansion, add greater weight to the IHRM role.

Conclusion

Plainly stated, “…The conduct of business is increasingly international in scope and managing human resources is critical to the successful conduct of global business” (Briscoe, Schuler 2). The research clearly indicates that IHRM is a field and a study growing exponentially and, in the course of the growth, expanding its own parameters through necessity.

That IHRM is important is not, as was noted in the beginning, a matter of debate. Rather, it is the degree to which IHRM is important that the research has sought to identify, and this degree is evidently a substantial one. It is common knowledge that the major United States business of today that is not in some way a global enterprise is one not fated to survive long; the mere fact of industrial global expansion creates this circumstance, in fact, because the competitive field becomes subsequently far larger. Global expansion translate to larger numbers, and larger number mean a greater command of whatever market is the target.

The United States occupies a singular position in all of this. On the one hand, its sheer power and volume of industry on a large scale renders it the most active participant in worldwide expansion. Then, the relative youth of the nation in relation with the countries in which it establishes its businesses gives rise to complex and different issues born from cultural disparities and nationally intrinsic modes of behavior. This in view, the research clearly points to an enormous level of import in IHRM as practiced from United States bases.

Summary

Had I been in any way dismissive of the role IHRM plays in global business, the research I did would have most effectively given me a new viewpoint. The challenges faced by United States industry are not things we typically consider, which is of course related to those very challenges by virtue of a shared “Americanism”. As a people we are accustomed to taking certain precepts for granted as being either the only ones worth maintaining, or as worldwide beliefs. Enormous differences in cultural attitudes, ranging from compensation to how even the work day is perceived, are factors no one investigating IHRM can ignore.

It may well be that, as time passes and business becomes more thoroughly global in nature, IHRM will be seen as the truly critical element in industrial success it is. More study is given to the subject all the time, as manifestations of its impact become more keenly known in today’s world. With more attention devoted to this branch of business which oversees what is essentially the human factor in industry, a better uniting of otherwise conflicted cultures may be  another benefit. As people are divided by cultural backgrounds, they nonetheless unite in work. Consequently, the real import of IHRM may be only just beginning to make its presence felt.

Works Cited  

Aswathappa, K. International Business. New Delhi, India: Tata McGraw-Hill, 2008. Print.

Briscoe, D.R., and Schuler, R.S. International Human Resource Management: Policy and Practice  for the Global Enterprise. New York, NY: Routledge, 2004.

Gannon, M.J. Paradoxes of Culture and Globalization. Thousand Oaks, CA: Sage Publications, Inc., 2008. Print.

Huntington, S. P. Who Are We?: The Challenges to America’s National Identity. New York, NY: Simon and Schuster, 2004. Print.

McCormick, J. Europeanism. New York, NY: Oxford University Press, Inc., 2010. Print.

Rugman, A.M., and Brewer, T.L. The Oxford Handbook of International Business. New York,    NY: Oxford University Press, 2001.

Sims, R.R. Human Resource Management: Contemporary Issues, Challenges, and Opportunities. New York, NY: Information Age Publishing, Inc., 2007. Print.

Stahl, G. K., and Bjorkman, I.  Handbook of Research in International Human Resource Management. Northampton, MA: Edward Elgar Publishing, Inc., 2006. Print.

Tuleja, E.A., and O’Rourke IV, J.S. Intercultural Communication for Business. Mason, OH: South-Western Cengage Learning, 2008. Print.