With the process of globalization and internationalization, multinational firms develop rapidly. What is the multinational firm? It should be called multinational corporation (MNCs) which is more academic. An MNC is a company physically active in more than one country, like McDonald, Nestle, Ford etc.
General speaking, Human Resource Management plays an essential role for an enterprise, especially for a multinational enterprise. What is Human Resource Management? Noe et al. (2006: 5) defined HRM that “HRM refers to the policies, practices and systems that influence employee behavior, attitudes and performance in order to support business goals and objectives” while Dowling et al. (2008: 2) “HRM refers to those activities undertaken by an organization to effectively utilize its human resources”. What are HR activities? Earlier research (Beardwell, J. and Claydon, T., 2007) demonstrated that HR activities for an enterprise include: human resource planning, staffing (recruitment, selection, placement), performance management, training and development, compensation (remuneration) and benefits, industrial relations. HR activities are more complex and complicated for a multinational firm. The managers may encounter more challenges and difficulties which do not exist in the HR activities for a domestic firm. There are problems about different nations of employees, different cultures and regional differences. Therefore, every HR activity may be different in Human Resource Management between MNCs and domestic firms. This essay will discuss three HR activities engaged in HRM for an MNCs, which are not require in a domestic circumstance.
Firstly, it is staffing, including recruitment, selection and placement. In this part, the action involved in HR activities of a multinational firm and not required in a domestic environment is the staffing of subsidiaries. There are three sources of employees for subsidiaries: staff from home country, where enterprise is headquartered; staff from host country, where subsidiary is located; staff from third country. Every source of labour has unique advantages and disadvantage.
Employees of parent country nationals (PCNs) can understand the parent company’s intension better. They have a clearer definition of the current mission of the company. They are more familiar with the system of management and the mode of operation. However, there are some inevitable weaknesses of PCNs. More employing PCNs means higher cost of employment. Generally, the salaries of PCNs are higher than the local employees. Multinational enterprises tend to have more stringent requirements on the quality of PCNs, including professional knowledge and skills, communicational and social skills, ethics, reputation, etc. It is possible that PCNs are not familiar with the local environment, they may blindly implement the methods of management from parent company, which are perhaps not suitable for local company. In addition, Legal restrictions about employing expatriates may exist in host country. Many subsidiaries of multinational companies tend to choose local labour, because this action can cut down the cost of HR activities effectively. Companies pay host country nationals (HCNs) less than PCNs. Moreover, more employing HCNs is beneficial for subsidiaries to adapt local environment and build a good relationships with local partners and consumers. The disadvantages of HCNs are that it is more difficult to communicate with the head company. HCNs may hardly understand and apply the methods of management from the head company.
The advantages of employees from the third country are skills of multi-language and sensitivity of cross-culture. Culture is “the collective programming of the mind that distinguishes the members of one group of people from another”(Hofstede, 2001:9). Managers need to consider cultural dissimilarities to make...