HRM and Globalization

 Introduction to Globalization

Globalization is the word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Countries have built economic partnerships to facilitate these movements over many centuries. But the term gained popularity after the Cold War in the early 1990s, as these cooperative arrangements shaped modern everyday life. This guide uses the term more narrowly to refer to international trade and some of the investment flows among advanced economies, mostly focusing on the United States.

The wide-ranging effects of globalization are complex and politically charged. As with major technological advances, globalization benefits society as a whole, while harming certain groups. Understanding the relative costs and benefits can pave the way for alleviating problems while sustaining wider payoffs (Peterson Institute for International Economics, 2021.)

International Business evolved from the age of World War I (1919) & World War II(1939 ). The economies of several counties were down. Exports & imports were restricted due to unhealthy relations.  Then the world war countries found the need for international cooperation in global trade. This led to the formation of IMF( International Monetary Fund)  & World Bank. The attempt of these advanced countries ended with the GATT( General Agreement of Trade & Tariffs) & gradually GATT was replaced by WTO(World Trade Organisation) in 1995.

Hence the efforts of IMF, World Bank & WTO lead to the globalization of business during the 1990s.

Globalization

• Doing business in more than one country.
• Operating and expanding the business throughout the world.
•  Establishing manufacturing and distribution facilities in any part of the world.
•  Global organizational structures, organizational culture & strategies.

Global Mind Set

The process of globalization forces companies and individuals to develop a global mindset. A Mindset is a way we, whether an individual or an organization observes, accept, and makes sense of the world around us. (SPIRIT OF HR, n.d.)

Human Resource Management

HRM is a management function that helps a manager to plan the required manpower, recruit, select, train, motivate, engage and develop employees for the Organisation.

In other words, it is an organizational function that is related to the employee concerns such as recruitment, employee motivation & development, training, wellness, compensation, benefits, and administration.

Importance of Human Resource Management

• It helps an Organisation to supply the required manpower to accomplish the organizational goals.
• It trains the employees to gain specific skills and knowledge required to work.
• It facilitates and provides opportunities for employee development.
• It engages the employees in their work & in the organization.
• It provides an employee their wages, benefits, recognition, motivation, social security & status.

Functions of Human Resource Management:

Manpower Planning	Performance Management
Recruitment	Employee Engagement
Selection	Compensation and benefits
Training & Development	Employee Exit

Impact of Globalization on HRM

Globalization symbolizes the free flow of technology and human resources across national boundaries presenting an ever-changing and competitive business environment. Globalization is a process that is drawing people together from all nations of the world into a single community linked by a vast network of communication technologies. This aspect of globalization has also affected HRM in the business world of today. HR managers today do not need to rely on a small limited market to find the right employees needed to meet the global challenge, but today they can recruit employees from around the world. The future success of any organization relies on the ability to manage a diverse body of talent that can bring innovative ideas, perspectives, and views to their work. Thus, an HR manager needs to be mindful and may employ a ‘Think Global, Act Local’ approach in most circumstances. Many local HR managers have to undergo cultural-based Human Resource Management training to further their abilities to motivate a group of professionals that are highly qualified but culturally diverse. . Furthermore, the HR professional must assure the local professionals that these foreign talents are not a threat to their career advancement. In many ways, the effectiveness of workplace diversity management is dependent on the skillful balancing act of the HR manager.

Global HRM refers to Human Resource Management practices that deal with managing a diversity of workforce from all around the world.

The impact of globalization on HRM is as follows:

• Managing Cultural Diversity: Managing different employees from different cultures in the same organization is a complex activity. Employees from each country think differently, perceptions are different towards work culture, the languages change, vocabulary differs and even non-verbal communications are quite different in each region. This makes the task of the human resource department challenging due to globalization.
• Managing Expatriates: Preparing the home country employees to work in a different country is a herculean task. The beliefs, value systems, culture, and attitudes are diverse in nature. Recruiting, retaining, and motivating expatriates to have a major impact on the business. Understanding expatriate’s need is a prime concern for the human resource team.
• The difference in the Employment Laws: The employment laws or the labor laws differ from one country to another. The understanding of not only the monetary benefits becomes essential but also the nonmonetary benefits such as leaves, flexi timings are important to be included in the human resource policy.
• Managing Outsourcing of employees: Outsourced employees to manage the business is a big impact of globalization. Managing the BPO, KPO employees working with different cultures, and different languages, working in completely opposite shifts is a new shift in the area of human resources. Managing the expectation of these employees is a challenge for today’s HR and this challenge is a result of globalization.
• Managing virtual employees: The majority of the information technology based organizations have employees working “on-site” at a client’s location which is completely new to them. The virtual employees have to be managed, retained and motivated in a different way, unlike the “off-shore” employees. This practice of managing virtual employees is a result of organizations going global.
• Corporate Social Responsibility: Corporate houses actively participating in the practice of doing for the betterment of the society have emerged from western countries. It is one of the ways to make the presence felt in the host countries. Employees are encouraged to participate in such activities which help to reduce stress working with MNCs.
• Coping with flexible working hours: The practice of flexible working hours has emerged as one of the retention initiatives of workforce especially for women employees who can maintain the work-life balance. This practice of flexible working hours is the result of working beyond normal time zones. Organizations that have a global presence need the attention of employees at various time zones which is not possible for all employees doing a continuous shift. Hence this practice emerged from globalization and has a positive impact on the HRM practice.
• Evolution of more part-time and temporary work (especially among women, the elderly and students): The concept of part-time employment, and contract jobs have emerged from the practice of MNCs since a hundred percent of the workforce on permanent payroll is quite an expensive matter to these organizations. The majority of large MNCs in the information technology sector has their employees under contract employment.
• Coping up with emerging technologies & quality measures: Every employee in today’s leading organization is being trained with the latest technologies, especially with the ERP concept like SAP or Peoplesoft. This step has been taken by MNCs to equip the employees with the latest technology enabling the employees to cope with the changing technology. Certifications like Six Sigma are availed to employees to manage the business on an international platform.
• Changing perspective from subordinates to business partners: The shift has been observed in today’s MNC that the culture of subordinates is getting extinct. Employees have been treated as business partners’ i.e every employee is responsible for the growth of the organization and considered a partner in the company. This impact is the result of globalization. (SPIRIT OF HR, n.d.)

References

Peterson Institute for International Economics, 2021.. Piie. [Online]
Available at: https://www.piie.com/microsites/globalization/what-is-globalization#:~:text=Globalization%20is%20the%20word%20used,investment%2C%20people%2C%20and%20information.
[Accessed 04 08. 2022.].

SPIRIT OF HR, n.d. GLOBALISATION & HRM. [Online]
Available at: https://spiritofhr.wordpress.com/globalisation-hrm/#:~:text=Global%20HRM%20refers%20to%20Human,organisation%20is%20a%20complex%20activity.
[Accessed 04. 08. 2022.].