The Strategic Role of Hrm in Multinational Corporations

Topics: Multinational corporation, Human resource management, Management Pages: 18 (5805 words) Published: July 17, 2010
The Strategic Role of HRM in Multinational Corporations – A Holistic Perspective.

Sanjay Bhavnani

Director & Chief Operating Officer
MMS Maritime Agency(I) Pvt Ltd

A Subsidiary Company of Meiji Shipping Group, Japan
To say that Human Resource Management is assuming a key importance in all organizations would be an understatement. It would be far more realistic to recognize the fact that the field of HRM is being perceived as more strategic in nature at all levels of an Organization which till very recently was being viewed traditionally as primarily operational in its function.

As more firms move outside their domestic borders into the dynamic world of international business, the globalization of world markets appears to be gaining momentum. The last two decades, in particular, have seen dramatic changes in international trade and business. Once-safe markets are now fierce battlegrounds where firms aggressively fight for markets share against foreign and domestic competitors. It is, therefore, not surprising to find that a large proportion of the workforce in an increasing number of firms, regardless of their national origin, is located in other countries. These trends are likely to continue well into the 21st century. This globalization of business is forcing managers to grapple with complex issues as they seek to gain or sustain a competitive advantage. Faced with unprecedented levels of foreign competition at home and abroad, firms are beginning to recognize not only that international business is high on top management’s list of priorities but also that finding and nurturing the human resources required to implement an international or global strategy is of critical importance. Effective human resource management (HRM) is essential, especially for small and medium firms where international expansion places additional stress on limited resources, particularly people.

Virtually any type of international problem, in the final analysis, is either created by people or must be solved by people. Hence, having the right people in the right place at the right time emerges as the key to a company’s international growth. If we are successful in solving that problem, I am confident we can cope with all others.

The Need for a broader perspective

HR managers working in a domestic environment generally administer programs for a single national group of employees who are covered by a uniform compensation policy and taxed by one national government. Because HR managers working in an international environment face the problem of designing and administering programs for more than one national group of employees (e.g., PCN, HCN, and TCN employees who may work together in Zurich at the European regional headquarters of a U.S.- based multinational), they need to take a broader view of issues. For example, a broader, more international perspective on expatriate benefits would endorse the view that all expatriate employees, regardless of nationality, should receive a foreign service or expatriate premium when working in a foreign location. Yet some multinational, which routinely pay such premiums to their PCN employees on international assignment (even if the assignments are to desirable locations), are reluctant to pay premiums to foreign nationals assigned to the home country of the firm. Firms following such a policy often use the term in- patriate to describe foreign nationals assigned to the home country of the firm. (The utility of this term is unclear and is avoided in this book.) Such a policy confirms the common perceptions of many HCN and TCN employees that PCN employees are given preferential treatment. Complex equity issues arise when employees of various nationalities work together, and the resolution of these issues remain one of the major challenges in the international HRM field

More Involvement in employee’s Personal Lives

A greater degree of involvement in employee’s personal lives is...
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