What are the implications for the HR Strategy of an organization of operating on a multi-divisional , multi-national basis ? Before I start examining any of the implications I must explain what is meant by a firm operating on a multi-divisional and multi-national basis. Note that in this essay I am looking at a firm that adopts both of these principles not just one which does exist. Firstly a multi-divisional firm is split into several divisions which all operate as separate businesses, but still all report back to corporate headquarters.
When this is put together with a multi-national company which is were a company operates in at least one more country than their own. The result is a firm where divisions are based in each country they operate in or in regions and report back to corporate HQ, shown below is a diagram which shows a typical multi-divisional, multi-national firm. Chief Executive Officer Corporate Office Spain France Germany Portugal Product Product Product A B C
The process of internationalisation and globalisation has multiplied in the last two decades as firms try and gain a competitive advantage perhaps through cheaper labour, better access to raw materials or even closeness to its markets. There are said to be four stages of globalisation the first stage of internationalisation is were a company operates in a foreign country but its operation is just a replication of its domestic business, multi-divisional multi-national firms are said to be in the second or third stage of globalisation.
The final stage of internationalisation is globalisation here a company treats the world as if it were just company. Companies realise if they are to be successful internationally they must develop an appropriate human resource strategy. It still shares some of the characteristics of a domestic HR strategy ETC . However there are notable differences which companies must address if they are to develop a successful HR strategy which will lead to international success.
There are many issues that are related to an international HR strategy and hopefully in this essay I will explain some of the main issues surrounding HR strategy and various aspects which must be included within the strategy. The type of company we are studying are likely to use a polycentric or regiocentric staffing approach etc . Whichever approach the company chooses they are going to have deal with effective recruitment and selection. There are three different types of employees the company has to deal with.
Firstly there is Parent Country Nationals or Expatriates these are employees from the company’s country of origin, next there is Home country nationals these are employees from the country the firm is working in and finally there are third country nationals where employees are of origin different to the country they are working in and different to the parent company’s country. All of these types of employees have their advantages and disadvantages and all must be incorporated into the firms HR strategy.
However integrating these three types of employees and getting them to communicate and working efficiency is much harder. The first issue firms must address to have any chance of integrating the workforce is to deal with the problem of culture. Culture within itself is very hard to define ranging from expression through the arts to social perceptions. However the definition of culture below by Kluckhomn (1951) despite being rather long is the best definition I can provide.
‘ Culture consists of patterns, explicit and implicit of and for behaviour acquired and transmitted by symbols, constituting the distinctive achievement of human groups, including their embodiment in artefacts; the essential core of culture consists of traditional ( ie historically derived and selected) ideas and especially their attached values; culture systems may on one hand be considered as products of action, on the other as conditioning elements of future acts. ` MNC’S bring together many people of both different nationalities and different cultures into the workplace and are expected to develop a working relationship.
Cultural differences can be advantageous through sharing of knowledge and processes, however unless cultural diversity is managed well there is little shared learning but more arguments and disagreements that can hinder a firm’s profitability. Cultural differences can display themselves either as simple misunderstandings or at times even conflict between staff. People from one country and culture behave differently than another worker from a different background, for example eye contact can be seen as disrespectful in some cultures whilst in others it signifies respect.
It is these kinds of misunderstandings that lead to conflict, some of these issues can be resolved through an MNC’s HR strategy for example briefing staff properly and encouraging mutual respect. One method open to the HR department is to utilise its own corporate culture which can promote social cohesion and act as the ‘glue’ that bonds an organization together. This approach allows people to work towards common goals so they can identify each other and hopefully work together in harmony because the uncertainties and differences have been transformed into a common organizational culture.
However to get these workers to operate in teams is more complex and depends on the firm’s ability to achieve a ‘fit’ between these various cultures. The term fit refers to the extent that cultures are brought into a working relationship that allows tension and misunderstanding to disappear within the relationship. Cultural fit does not imply an integration of cultures but merely provides a mutual acceptance from all parties involved .
Perhaps one of the most difficult elements in culture is those cultural attributes that are more deeply rooted than others if individuals can not lose these beliefs than a cultural fit will be unlikely to be achieved. I have talked about some of the main issues regarding culture and how to deal with it , but it all depends on how far HQ want to accept local cultures to fit in with their own. DEPENDS ON DECENTRALISED One of the biggest problems for firms is the problem of expatriate failure and it is up to the firm to try and prevent this.
Expatriates leaving not only cost the company in terms of salary wasted but when combined with personal and family training, travel and relocation can cost the company nearly three times as much as they spend on a HCN. There can also be indirect costs like the potential breakdown of relations with either host government officials or even the workforce where productivity could suffer as a result as the manager leaving. Not only does it cost the company in foreign operations when he returns his loss in confidence and self-esteem may effect profits domestically.