Research Paper On Global Hrm Challenges
More than ever in history, companies and organizations today face both the opportunity and the challenge of employing global workforces that diverge in age, gender, education and culture.
This paper has shown how and why workforces will continue to comprise these differing attributes, as well as the advantages and pitfalls. This section presents the challenges human resources managers face when ensuring that their organizations succeed in the global environment.
I. The globalized workforce
HR challenge: Adapting hiring and retention strategies to prepare for tomorrow’s changing workforce
A dwindling youth population in developed economies and high youth unemployment in developing regions is causing skills shortages. Some of these shortages are being filled by older workers, more women in the workforce and cross-border migration. Demographic as well as cultural diversity will continue to define the global workforce as companies seek to fill shortages, gain market efficiencies and acquire strategic assets.
Older workers provide experience, but they also pose challenges for organizations, including providing healthcare for a population that will experience four-and-half-times as many disabilities as younger workers,127 creating flexible work schedules and shifting responsibilities away from physically demanding work. This is compounded in a global workforce that combines differing management and work styles based on individual cultures. The challenge is to identify the right job roles, incentives and retraining opportunities for each worker while avoiding age-discrimination practices.
The challenge is similar where gender is concerned. Governments and companies are creating accommodations such as day-care centers and flexible working hours for women, but taking advantage of a gender-diverse workforce requires an understanding of how to attract women into the workforce and providing rewards parity. In South Korea, only 60 percent of 25-64-year-old women are contributing to the workforce owing to social pressures, resulting in senior-level positions being exclusively filled by men. In response to this imbalance, Goldman Sachs is promoting underutilized female talent in South Korea.128
Many organizations are already using HR analytics for workforce planning. To avoid coming skills shortages, HR can expand its use of analytics such as gender and other diversity metrics to further understand the make-up of recruits and provide matching incentives.
HR challenge: Preparing for the complexities of hiring, managing and integrating a global workforce
The growth of liberal cross-border trade, the use of communications technology and the expansion of transnational companies are not likely to let up. Attracting global talent requires staying abreast of new strategies for finding and attracting talent. Business technology consultancy Infosys decided to hire Chinese graduates and started by inviting and teaching a select group of Chinese students English at its office in Mysore, India, allowing the company to source workers from a neighboring country cost-effectively.129
Technologies such as social media are essential for recruiting, but the challenge is to align these new strategies with business goals. Aberdeen Group, a provider of business research intelligence, found that successful organizations are taking a holistic approach to recruitment that includes company branding, screening, assessment, hiring and onboarding, with technology helping at each step.130
Companies are also faced with the need to develop the means to assess skills across divergent talent sources and then creating training programs to fill skills gaps after employees are hired. In addition, they need to understand how to manage and integrate multicultural employees. When US pharmaceutical Upjohn merged with Swedish Phamarcia AB, no one foresaw the resistance to company-imposed policies such as alcohol-testing and smoking, which resulted in cost overruns, a slowdown in product launches and the eventual sale of the company.131
Managers can begin by understanding the nuances of the cultures using various tools such as Hofstede’s lenses, explained earlier in this paper, or the GLOBE project’s nine dimensions of culture.132 Although these tools tend to simplify the complex issues, they provide good bases for understanding the diverse cultures of employees and encouraging sensitivity.
II. Guiding corporate strategic decision-making
HR challenge: Incorporating the human capital opportunities and risks from operating abroad into corporate strategic decision-making
Workforce opportunities are marked both by steady improvements through the political machinations that open trade across borders and enable cross-border migrations, and by sudden and often unexpected changes such as the relaxation in relations between the United States and Cuba; conflicts in Syria, Iraq and Ukraine; and dramatic swings in oil prices. The challenge for companies is to remain nimble to take advantage of the opportunities while avoiding the risks.
HR’s challenge is to gather, assess and understand all the cultural, labor and market complexities of operating in each market so that the company can predict opportunities and risks, know when to enter or exit a market, and integrate successfully into new local markets.
The success of a company’s global growth hinges on HR integrating the workforce. HR-led teams need to assess the complexities of bringing together workforces with often dissimilar societal and corporate cultures. HR can, for example, identify potential roadblocks early and plan interventions before problems arise. The food facilities management company Sodexo identified a need for diversity and inclusion across its 355,000 employees from North American to China. It developed training programs that resulted in significant numbers of women, youths, people with disabilities and indigenous workers productively joining its workforce across the globe.133
HR challenge: Making the business case for CSR
Corporate social responsibility is among the top challenges companies face when expanding into new markets, especially in developing regions. Business practices that are acceptable locally are frequently at odds with the values of the company and the laws of its regulatory agencies. This creates a tug-of-war between social responsibility and the need to be successful in those markets, which can turn into significant risk.
The challenge for HR is to gain a detailed understanding of local environments and their accepted business practices. It then needs to establish protocols that are customized for each region and communicate these protocols throughout the organization and across its supply chain.
When local labor laws or practices conflict with the organization’s CSR policies, HR needs to be the voice of the individual and ensure that the company maintains its integrity, even when this goes against the potential economic value. HR faces the additional challenge of demonstrating to the company how good CSR policies strengthen the brand, increase customer loyalty and boost shareholder value.
HR challenge: Balancing corporate and societal cultures while promoting diversity
Some cultural attributes, such as a command-and-control management style, can be modified to fit local cultures, while others, such as integrity and human rights policies, cannot be compromised. HR needs to understand and deal with the complexities, deciding which corporate culture elements can change and which are essential to protecting the organization’s values and ethics. The company cannot change anti-bribery policies, but it may choose to change its dress-down-Fridays rule. Management may also choose to impose cultural elements, such as giving back to the community consistently across the global organization. The challenge becomes even more complex when dealing with new workers, those engaged through means such as crowdsourcing, as well as remote and temporary workers. HR also needs to develop programs to assist executives to adapt when they move from the head office to regions with different societal and cultural norms.
III. Preparing for the future
HR challenge: Preparing a new set of globally prepared leaders
Cultural diversity is frequently seen as a challenge, but it also provides great advantages. For example, a culturally diverse workforce may come up with more creative and innovative solutions to problems, because each person brings more unique perspectives and experiences to the table.
The challenge for HR is to educate managers on how to take advantage of the cultural differences while mitigating any friction. Developing practices for promoting collaboration among diverse workers and communicating values and policies across countries and ethnicities will be important to driving success within global organizations.
HR challenge: Identifying skills on a local level
Companies that can identify skills beyond those presented in traditional CVs and résumés will have an advantage over their competitors. Identifying the desired skills and finding them in a pool of candidates is a significant challenge for HR, especially when entering new markets and geographies.
IV. Staying within laws
HR challenge: Maintaining a comprehensive understanding of regulations and hiring laws
Temporary and part-time workers play an important role in today’s workforce. Yet laws regarding these workers differ from country to country. Indonesian law, for example, does not recognize the concept of part-time workers, who are consequently entitled to the same rights as full-time workers. Temporary workers, too, must receive the same benefits as permanent workers.
HR’s challenge when conducting workforce planning is to understand the nuances of the laws and customs in each of the regions where it operates and ensure that it is treating part-time, temporary and remote workers legally.
Regulations become murkier when the employment process is conducted through online crowdsourcing or other, less traditional recruiting methods, further increasing the risks while demanding greater understanding of compliance from HR.
Keeping up-to-date with ever-changing and complex labor laws in each country and region will continue to present a constant challenge beyond the traditional visa issues, local versus foreign worker regulations and migration laws.
127 The NTAR Leadership Center, Employer Strategies for Responding to an Aging Workforce, 2012.
128 Deloitte Review, Headwinds, Tailwinds and the Riddles of Demographics, 2012.
129 Accenture, Multi-Polar World 2: The Rise of the Emerging-Market Multinational, 2008.
130 Aberdeen Group, Talent Acquisition 2013: Adapt Your Strategy or Fail, 2013.
131 The Cultural Environment of International Business, Chapter 5, International Culture, 2008.
133 Sodexo, Global Diversity & Inclusion Report, 2009.
This paper focuses on the new roles and challenges for the International HRM function. It highlights four key challenges facing international HRM specialists. The first - moving from traditional models of HRM towards more globally defined roles - has arisen from developments in technology, increasing regionalisation of business and the growth of networks within organisations. The second challenge concerns the need to develop global capability. The third challenge requires us to rethink the mechanisms that are used to transfer knowledge globally. The fourth challenge is cope with pressures for cost effectiveness, and the streamlining of systems, processes and sourcing activity. The paper then examines the pragmatic choices that IHRM functions are making to cope with these challenges. There are five areas of debate associated with these choices. The first concerns the pursuit of international HR shared service structures and the extent to which this facilitates global solutions. The second concerns associated developments in e-enablement and its role in integrating operations internationally. The third concerns the issue of specialisation and associated developments in outsourcing, insourcing and offshoring. The fourth concerns the role of interpersonal networking and formal organisation designs such as centres of excellence to help overcome the constraints that technology places around global knowledge sharing. The fifth and final debate surrounds the nature of the business partner role in international context, and the differing nature of line manager involvement in HRM across countries.