As a HR specialist, what are the challenges you may face and what HR intervention mechanisms would you consider using in an attempt to drive individual and organisational performance in a multinational company? Critically evaluate this question by utilising the appropriate academic literatures.
This thesis proposed the challenges of the HR specialist when there engage in attempt of increasing the individual and organisational performances in Multinational Companies through developing a set of coherent HRM best practices, especially relating to employee recruitment and selection, performance management and staff retention. Since the organizations are multinational number of concerns are arises such as dealing cultural issues with the organizational goals as well as individual goals. Furthermore organizational behaviors and tools such as engagement, motivation and empowerment are basically highlighted; without those it is merely a dream to achieving the business goals. Basically Multinational companies are aiming profits and there for individual and organisational performance are very vital for their existence.
HR has been organized in a different ways over the years. Some functions have emphasized delivery by location or by business structure. In these models an integrated HR team has serviced managers and employees at specific location or with in specific businesses units, with some more strategic or complex tasks reserved for the corporate centre. The degree to which these different arms of HR were centralized or co-located and the question of whether they were managed by the business unit varied. Within the HR teams, depending up on their size their might have been specialization by work area (especially for industrial relations in the 1960s and 1970s) or by employee grade or group (responsibility, say, divided between those looking after clerical staff from those covering production) The advancement of personal management starts around end of the 19th century, when welfare officers came in to being. This creation was a reaction to the harshness of industrial conditions, coupled with pressure arising from the extention of the franchise, the influence of the trade unions and the labour movement and the campaigning of enlightened employers, often quakers, for what was called ‘industrial betterment’. (CIPD Research Role of HR)
Personal Management(PM) is mainly concerned with obtaining, organizing and motivating the human resources required by the corporation (ARMSTRONG, Michael, 1977) PM includes a range of activities which deals with the workforce other than the resources and also more administrative in nature. HRM deals with soft issues rather than administrative tasks of personnel management and explain a wide vision of how management would like the resources to organise to the success of the organization.
Becker and Gerhart (1996) and Wright,Dunford and Snell (2001) have concluded that although the traditional view as HR a’cost to be minimised’ (Becker & Gerart,1996:779)is being challenged by the rise of strategic HRM, the conventional view is still prevalent in the professional domain. Wright, Dunford and Snell(2001)expand on this by stating that the HR function has’consistently faced a battle in justifying its position in organisations’ (Wright,Dunford & Snell 2001:701) and during times of economic hardship, the HR function is usually the first function to feel the full effect of organisational streamlining and cost cutting efforts.
There are various models exists to explain the peoples role in an organization. The business oriented approach to people management described by Storey (1989) as “Hard HRM” emerged as a method of responding to and supporting the enterprise culture of the 1980s. Hard HRM and Soft HRM are two contrasting styles that helps to tackle workforce in an organization. Hard HRM mainly focused on achieving organisational goals while Soft HRM deals with more insightful functions like Human Resource Education, Leadership Development, Organization Culture, Relationship building while the achieving organisational goals.
More recently the importance of involving and developing people which is characteristic of current approchches to personal management has been emphasized by the resource based theory of the firm formulated by Barney(1991). This explains that competitive advantage is achieved if a firm can obtain and develop human resources which enable it to learn faster and apply its learning more effectively than its competitors. An approach based on this concept will aim to improve resource capability(Kamoche,1996)achieving strategic fit between resources and opportunities and obtaining added value from the effective deployment of these resources.(The name has changed but has the game remained same, Armstrong)
Ulrich described how HR practitioners employ in a set of roles defined along two axes: strategy versus operations and process versus people. The four key roles that become known from these two dimensions are Strategic partner, Administrative Expert, Employee Champion, Change agent. Strategic Partner’s help to successfully accomplish business strategy and meet customer needs. Administrative Experts continuously improve organisational efficiency by reengineering the HR function and other work process. Employee Champions maximize employee commitment and capability while Change Agent delivers organisational transformation and culture change. (CIPD Resarch Of HR, 2007) There have been considerable tensions around the conceptualizations of roles and how the work of Ulrich and others has been interpreted. According to Ashton and Lambert (2005),while Ulrich’s original four roles have been influential, whether and how they are put in to practice varies. (The changing HR functions)
There are some organizations where HR is seen as a central, corporate function with little advancement to business units. Some other organizations position themselves in the opposite direction, with a very small corporate centre and all the activity distributed to business units. The question of best structure is how the function best organizes itself between the pulls of centralization and the pushes of decentralization.(The changing HR functions)
The HR assumptions and HR practices observed in high performing firms are the key elements to the formation of the Best Practice theory. Employment security, selective hiring, self managed teams, high pay contingent on company performance, extensive training, reduction of status difference, and sharing information are the key element of the theory. However less concern about the organisational goals and culture are given as draw backs for the theory.
According to the “best fit theory” a firms that follows a cost leadership strategy designs narrow jobs and provides little job security, whereas a company pursuing a differentiation strategy emphasizes training and development. In other words this argues that all SHRM activities must be consistent with each other and linked to the strategic objectives of the business.
Selective hiring of new employees are greatly support to achieve both individual and organisational performance. Recruitment and selection is more or less subjective in its nature, with the objectives of any given business at the forefront of process. To select the best fit there is no specific way.” It is clear that combining techniques greatly increases accuracy. The combination of intelligence test or work sampling leads to a substantial improvement in validity (Shmidt and Hunter(1998)). Comprehensive recruitment and selection policy will be enable an organization to become competitive with in the market and also, with right people in the right place at the right time, will lead to a high performing culture with in the organization while adding extra value to the organisation. The main focus of Employee Recruitment is to generate a pool of appropriate candidates for the selection process. This to be carried out in cost effective way and while remain in lawfull. Organizations can decide whether to select externally or internally. Internal recruitment may not always be beneficial. Ex: no one suitable or stagnation. Best way is to recruit both internally and externally (Torrington, Hall & Taylor, 2008). But many organisations prefer to look to recruit internally first especially when this represents a promotion (Newall & Shackleton, 2000)
To select the best fit there is no specific way. “It is clear that combining techniques greatly increases accuracy , the combination of intelligence tests with structured interview, integrity test or work sampling leads to a substantial improvement in validity” (Schmidt & Hunter (1998).)
At the interview stage attitude based competencies should give more priority in order to select the best candidate. In addition during the recruiting and selection process psychological contract between employer and the employee is distinct and specify. According to the report ‘Engaging for Success: enhancing performance through employee engagement’,engaged employees have a ‘sence of personal attachment to their work and organization; they are motivated and able to give of their best to help it succeed and from that flows a series of tangible benefits for organization and individual alike'(Macleod & Clarke 2009:7)
HRM uses various technologies to direct employees behavior towards objectives and tasks that deliver approved organisational performance. Many organizations try to frame these ‘levers’ with an overall performance management system, and attach incentives and rewards to achievements of objectives and targets within this.
In recent years PM has become massively popular. The basic idea was to fix behavior to targets and attach financial rewards. Howe ever performance related pay was not always introduced for the best reason; there was a preoccupation with defining measures to which individual rewards could be attached and the connection with performance was often tenuous (IPM/IMS, 1992) For many line managers PM is still means no more than the appraisal process and it seen as time consuming, bureaucratic, paper driven and top down with little reference to organisational performance and goals.(Egan,1995)
Despite significant efforts to present performance management as a systemic process and to raise managers sights (eg.Armstrong,1994;Hartle, 1995) many fundamental problems remain. A PMS may, indeed, support employee development, but this is often undermined by number of problems, among the most important which are, The link between individual behavior and business objectives, Defining and aligning objectives, Motivation theory and managers own assumptions and beliefs, Performance management as a management process, The impact on the employment relationship etc..
A analysis of above issues highlights fundamental questions about performance linkages and how rewards are attached to these and how the motivation to control unnecessarily and inappropriately vitiates the design of rewards and incentives.(Human Resource Management Journal, vol 10-No-3) In addition people performance is vitiated by the obsession with control and therefore is liable to undermine, rather than contribute to, performance. It should only be done within a context of strict attention to corporate business objectives and limited number of specific improvement goals.
Engagement is a crucial organisational tool that can generate both individual and organisational performance and can be defined as ‘ a set of positive attitudes and behaviors enabling high job performance of kind which are in tune with the organization mission'(Storey, Wright & Ulrich 2008)
Recent research concluded that there are 3 broad groups of employees. Engaged (loyal, productive, would recommend their organization to friends) , Non-engaged (productive but not bonded, tempted by job vacancies, instrumental, focus on hours & JDs), Disengaged (physically present but psychologically absent, negative, uncooperative, hostile, uninvolved) (Buckingham (2001) ‘What a waste’ PM October) We can perhaps distinguish between two types of employee turnover: Functional vs Dysfunctional turnover – functional turnover serves to promoted ideas and methods and can ‘thus renew a stagnating organisation’ (Carrell et al, 1995, 177). According to Hom and Griffeth (1995), functional turnover is more common than dysfunctional: In addition, high turnover is often less troubling in relatively low skill occupations; especially customer-service related ones (fast-food restaurants, telesales, etc). Kearns (1994) suggests this is because organisations want to harness short-term enthusiasm. Thus, employee turnover may not be a bad thing, however, there is likely to be a point beyond which it is unhealthy. Taylor (2008) suggests this is a rate of 5-10%. The more valuable the employee to the organisation, the more damaging the resignation especially if he/she chooses to work for a competitor Indirect concerns/costs include:-Productivity losses,Impaired quality of service,Lost business opportunities, An increased administrative burden,Employee demoralisation
Direct costs include: Recruitment costs (advertising, admin, etc),Induction/training costs,Other admin costs associated with new hires,Overtime/ cost of temporary workers,Reduced productivity during induction Taylor (2008)-The employee turnover decisi Evaluate existing job, Experience job dissatisfaction, Think of quitting, Evaluate expected utility of search for new job and cost of quitting, Decide to search for alternatives, Search for alternatives, Evaluate alternatives, Compare best alternative with present job, Decide whether to stay or quit, Quit on process Mobley(1977), ten stage model. There are ways to investigate why employees leave from the organisation.,Exit interviews (89%)Anon. exit questionnaires (28%),Word of mouth (25%),Extrapolate from staff attitude surveys (23%),Exit interviews – external consultant used (2%),Surveys of ex-employees (rare) (CIPD survey 2009) Following ways are considered as most effective way to address staff retention.Realistic job previews, Job enrichment, Workspace characteristics (environment), Induction practices, Leader-member exchange, Employee selection, Reward practices, Demographic diversity,Managing inter-role conflict (Hom & Griffeth, 1995)
Multinational Corporation has its facilities and other assets in at least one country other than its home country. Such companies have offices and factories in different countries and usually have a centralized head office. Nearly all dominant multinationals are American, Japanese, or Western European such as Nike, Coca-cola, Wal- Mart, AOL, Toshiba, Honda and BMW.
MNCs may take any of four forms: a decentralized that has a strong home-country presence; a global and centralized corporation that can acquire a cost advantage through centralized production; an international company that builds on the parent company’s technology or research and development; or a transnational enterprise that combines all three of these approaches.
In the modern world the capabilities and the knowledge incorporated in an organisation’s human resources are the key to performance. So on both the cost and benefit sides of the equation, HRM is crucial to the survival, performance and success of the enterprise. For MNCs, the additional complications of dealing with multicultural assumptions about the way people should be managed and differing institutional constraints become important contributors to the chances of that success.
A culture is a set of basic tacit assumptions about how the world is and ought to be that a group of people share and that determines their perceptions, thoughts, feelings and to some degree, their overt behavior. Culture manifests itself at three levels. The level of deep tacit assumptions that are the essence of the culture, the level of espoused values that often reflect what a group wishes ideally to be and the way it wants to present it self publicly and the day to day behavior that represents a complex compromise among the espoused value, the deeper assumptions, and the immediate requirements of the situation. (1996)(Sloan Management Review/fall 1996)
Geert Hofstede’s theory of cultural dimensions describes the effects of a society’s culture on the values of its members, and how these values relate to behavior, using a structure derived from factor analysis. The theory has been widely used in several fields as a paradigm for research, particularly in cross-cultural psychology, international management, and cross-cultural communication.
The original theory proposed four dimensions along which cultural values could be analyzed: individualism-collectivism; uncertainty avoidance; power distance (strength of social hierarchy) and masculinity-femininity. (task orientation versus person-orientation) With compared to UK Asian countries characterized by high power distance and week uncertainty avoidance. The HRM approach in Asia generally accepted as being humanists rather than materialistic. Therefore MNCs in Asia focus much concentration on personal growth and development of employees. In return for an organization creating opportunities, employees reciprocate with increased commitment and lower levels of absenteeism and turn over. (Ayree, Chen and Budhwar,2004) In European context highly focus on Individualism and masculine with low power distance and week uncertainty avoidance Hofstede,1980). Performance Appraisal Systems (PAS) basically aimed towards being achieving individual-level targets for employees and preparing cutting edges to identifying performance ratings for rewards. Individualism is more common in western cultures unlike Asian culture is more parental. Therefore western HR practice may be not measured the required standards in Asian MNC employees performance if it not ideally matched for the cultural and organisational targets. However some argues that the world is becoming more globalised, all aspects of business and HRM are becoming more alike which indicate the convergence – divergence debate.
In conclusion there is evidence to suggest that including the practice out line within this thesis organisational behaviours and tools can used to drive organisational and individual performance in Multinational companies. It is essential to have suitable recruitment and selection process, Performance Appraisal System and Staff Retention plan to ensure the right people, In the right place, at the right time with right attitude. Training and development is also vital to improve HR performance. In addition HR Specialists role will be more specific when these techniques applying in to multi cultural environments where people perceptions and behavioral patterns are different from each other.