This IHRM report is based on a large food retail company in UK, Malone Superbuy Ltd. The present strategic plan of the company is to venture into the Middle Eastern and Asian markets.
This report is structured in six main sections: an assessment of domestic and international HRM (outlining the major differences including cultural and industrial differences); the strategy that can be implemented; policies to address labour issues; training and development programme; approaches to employee representation issues; and re-evaluation of employee reward policies.
1.0 Domestic and International Human Resource Management
International Human Resource Management (IHRM) has many similarities with domestic Human Resource Management (HRM), but there are several important differences. Even though IHRM has the same functions as domestic HRM, there are numerous additional functions, and involves broader perspectives. With an increasing focus on globalisation, many companies have to compete on a worldwide basis.
As a result, HRM in the international context requires developing an understanding of the issues facing multinational enterprises (Briscoe and Schuler, 2004). Therefore, an IHRM manager needs to consider more functions and activities than the one that is domestic based. While internationalisation has brought strategic opportunities to domestic and international organisations, concerns have been raised over the ecological and ideological sustainability of a continued pursuit of Western consumer capitalist business practises.
Akoorie and Scott-Kennel (2005) refer to these concerns that relate to the world’s natural resources such as oil, fresh water, forests and etc. Organisations are, according to them, being called to account to provide solutions to these problems. Proactive responses are required by management and HR is directly involved in this. Despite differing political views, cultural differences and value systems, there is a shift towards the adoption of Western business practises and consumer behaviour. The most common is the use of the English language in IHRM and international business. IHRM consists of the same main dimensions as domestic HRM, but there is more complexity in strategically coordinating the different organisational units across national barriers. It is important to take note that internationalisation is different from globalisation in that internationalisation is a spatially delimiting process. The model in figure 1, below, can help organisations to determine what factors influence domestic HRM and IHRM policies and practices when they operate in a multinational organisation. This model could be applicable to organisations as is.
Figure 1: Factors influencing domestic HRM and IHRM policies and practices Source: Hitt, D, W (1996)
1.1 Differences between domestic HRM and IHRM
Figure 2: Variables that moderate differences between domestic HRM and IHRM
Dowling (1999) defines some variables (see figure 2) that moderate differences between domestic HRM and IHRM, which include cultural environment, the industry with which the multi-national organisation is primarily involved, the extent of reliance of the multinational on its home country or domestic market, and the attitudes of senior management.
1.1.1 The Complexities Involved
The function of HRM is viewed as a basic component of the company’s overall corporate or business strategy. Therefore, HRM constitutes a major constraint when multinational companies (MNCs) try to implement global strategies. This is mainly because of the complexities of operating in different countries involved, as well as due to the employment of people with diverse national backgrounds. Therefore, the complexities of operating in different countries and employing diverse people are a key variable that can differentiate international and domestic HRM, rather than any other major differences between them. 1.1.2 The Cultural Environment