Managing Human Resources in Global Organizations Essay

Managing Human Resources in Global Organizations

Introduction

            Given the substantial issues of diversity that all organizations are confronting today, the successful human resource practitioner needs a conceptual framework to deal with them in both global and single-country business environments. Diversity should be viewed not as a confounding factor but rather as a source of energy that drives change and growth. Rhinesmith (1993) points out that globalization has arrived and that “diversity – both domestic and international – will be the engine that drives the creative energy of the corporation. Successful HR managers will be those who are able to manage this diversity for the innovative and competitive edge of their corporation.” Undoubtedly, diversity can no longer be discussed only from a single-country perspective. Workforces in all countries are becoming more diverse, not just in gender, age, and race but also in culture (Hofstede, 1980). The workforce of any industrialized or developing nation will increasingly be a mix of domestic and international ethnicities. To deal with this challenge, the HR practitioner of tomorrow will have to understand the impact of cultural or global diversity, as well as of country-specific diversity, on the effectiveness of the organization and the workforce. A grounding in global diversity will allow the HR practitioner to address diversity issues from a broader perspective than that normally associated with a single country. It is important to remember that the diversity that exists within a country (for example, the United States) may be as great as the diversity between nations. With an examination of global diversity, it stands to reason that the emerging principles guiding HR actions will also be applicable within a country.  In order to think globally about single-country diversity the HR practitioner must understand several issues: the meaning and implications of global thinking for single-country applications; the transcending principles for enhancing diversity; globally derived models of thinking that foster diversity; the competencies HR practitioners require to be effective when working with global diversity issues; and the importance of grounding all HR initiatives in business relevance.

Definitions: Diversity and Globality

            If they understand the nature of diverse global HR practices, domestic HR practitioners will be better equipped to deal with a broader range of cultural mindsets and thus enhance an organization’s ability to use diversity. Domestic or single-country diversity and global or cultural diversity are both based on the same fundamental principles; global diversity simply has the additional crosscultural dimension (Hofstede, 1980). However, this “simple” additional dimension includes a range of entirely different mindsets that make HR practices more complex. Understanding this broader perspective can lead to more creative use of locally diverse ideas and practices. In business terms, this practice is referred to as leveraging. In this case, leveraging means that a little understanding of global or cultural diversity can lead to larger gains from local initiatives because broader and perhaps transcending principles are considered (Shell and Solomon, 1997).

            As organizations become more global, they need to develop appropriate HR practices that transcend national borders. Global HR practitioners are called on to address such issues as facilitating effective multinational (diverse) teams – for example, satisfying a top executive in China who is complaining that the expatriates sent on assignment to China are poorly selected and having great difficulty adapting to the culture – and developing HR practices, such as pay, to allow the equitable transfer of an individual from one country to another (Zhu, 2005). Even the notion of accepting different approaches to diversity varies depending on the culture. Cultures may be more or less open to new ideas. For example, North Korea is a more closed society, the United States a more open society. The global challenge for HR today is to help organizations operate in a complex, culturally diverse environment.

            When one uses the term global thinking, it is referred to thinking in terms of higher-order principles of behavior or HR practices. The term also generally refers to universal (that is, more widely applicable) principles and values. Thus, global diversity as a starting point means accepting different paths to a positive outcome. For example, some business products are the same regardless of the culture in which they are sold – a soft drink or a mobile phone are basically the same whether they are found in Russia or Egypt. It can be argued that the actual production of products, goods, or services have globalized more rapidly than HR practices.

            Back in 1989 Bartlett and Ghoshal (1989) have proposed a conceptual framework for understanding globalization that they refer to as the transnational solution. This solution suggests that to compete effectively organizations have to develop global competitiveness, multinational flexibility, and worldwide learning capability. In HR terms, this means that the HR practitioner must focus on such actions as ensuring an adequate supply of diverse international talent, high levels of individual and idea mobility, and an organizational culture that embraces diversity of thought, rather than imposing an “HQcentric” approach (Keeley, 2001). The definition of global then must encompass and embrace diversity at its foundation. An effective organization must be open to ideas or ways of thinking that come from any source. In contrast, thinking of diversity in single-country terms may limit potential sources of best practices or ideas.

Transcending Principles

            A broad set of principles regarding diversity has emerged that applies equally well to single-country or multicountry situations. This thinking is grounded in the belief that contributions of any individual regardless of age, gender, race, or ethnicity have value. For example, Thomas and Ely (1996) suggest that there are eight preconditions for making diversity more pervasive in any organization, whether domestic or global. These preconditions are described as follows:

The leadership of an organization must understand that a diverse workforce will embody different perspectives and approaches to work, and it must truly value variety of opinion and insight” (Thomas and Ely, 1996:81). Global thinking means that a company is open to any new ideas. Diversity in the cross-cultural sense means that ideas stem from a richness of different mindsets and cultural backgrounds. For example, when ideas about how to reward and pay individuals from both collective and individualistic cultures are blended, the process can be educational for both cultures.
“The leadership of an organization must recognize both the learning opportunities and the challenges that the expression of different perspectives present for an organization” (Thomas and Ely, 1996:81). Global thinking recognizes that change must be embraced and constant. Accepting diversity of thought and action is the starting point for change and creativity.
“An organization’s culture must create an expectation of high standards of performance from everyone” (Thomas and Ely, 1996:83). As this paper points out, HR practices must be grounded in results and based on appropriate values. High standards can be expected across cultures but still account for cultural differences.
“An organization’s culture must stimulate and value personal development” (Thomas and Ely, 1996:85). If diversity is to be a truly positive thing, the lessons offered by diverse views must be shared. Effective personal development can then be tied to many different sources of experience.
“An organization’s culture must encourage openness” (Thomas and Ely, 1996:85). Openness and flexibility are essential for personal as well as organizational growth. Openness translates into a willingness to accept new ideas, and diversity is a source of new ideas.
“An organization’s culture must make workers feel valued” (Thomas and Ely, 1996:85). Global thinking demands that differences be valued and celebrated. If a worker feels valued on an individual level, then both the organization and the individual win. In other words, when this is the case individuals will feel free to act and be empowered to apply their diversity of thought and action.
“An organization must have a well-articulated and widely understood mission” (Thomas and Ely, 1996:87). Results and outcomes are an organization’s reason for existence. To be accomplished, the mission must take full advantage of the diversity of thought available. If there is a clear mission, differences and diversity issues become secondary to the achievement of a common and shared mission.
“An organization must have a relatively egalitarian, non-bureaucratic structure” (Thomas and Ely, 1996:87). The structure must make it easy, not hard, for people to share ideas. Organizations that are resistant to change and diversity have heavy structures that makes even simple new ideas difficult to execute or implement.
In a global organization, it is essential that the cross-cultural dimensions of behavior be sufficiently understood to leverage HR practices properly. Schuler, Fulkerson, and Dowling (1992) highlight five basic and very practical constraints that may affect the transportability of HR programs in global organizations. Although these constraints may not be quite as dramatic in a one-country setting, the principles of diversity at work globally also have implications for the one-country setting. Some examples of complicating HR and cross-cultural issues are as follows.

Global Versus Local Considerations

            For the sake of globalization and efficiency, it does not make sense to have HR practices that are different in every country or location. Still, many generally accepted practices found in U.S. businesses may not be universally applied in other cultures with different laws and customs. For example, the U.S. headquarters of an organization may decide that pay for performance and performance appraisal are useful tools as a matter of principle. But the specifics of how those principles may be applied in subsidiaries around the world are another matter. For example, the Asian approach to pay for performance may place more emphasis on group or team rewards than more individually driven U.S. methods. Likewise, appraisal, a concept based on individual performance and development, may be very difficult if not impossible to carry out in a highly socialist country where jobs are scarce and wages low. In the traditional socialist or communist systems, individual rewards and indeed the very concept of individual differences are traditionally not acceptable; one individual cannot really be that different from another and therefore cannot be rewarded differently.

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            A look at feedback practices provides another example. In the United States, feedback has become a centerpiece of performance improvement. A whole set of rules or understandings have grown up around how feedback is to be delivered. These rules include not making the feedback personal but rather focusing it on the behaviors; never giving negative feedback in front of others in order to protect the dignity of the individual; making specific recommendations about how to improve; and saying the right words to build the self-esteem of the individual receiving feedback. Such assumptions must be challenged to understand what elements may be inappropriate cross-culturally. For example, in Japan a sales force had not met its performance quotas. This primarily collectivist society required that each salesman (there were no women in the group) who had not met the quota stand up in front of the entire sales force, admit his culpability, point out his failings, and then publicly promise to do better (Keeley, 2001). This seems counterintuitive for a collectivist society but is consistent with the cultural principle of shared accountability and responsibility to the group. It should be noted that in some cultures negative feedback, if delivered improperly, can cause an individual to lose face and feel humiliated. The point for the HR practitioner is that the relationship between diversity and HR practice specificity must be understood.

            The mind of a global executive is focused primarily on the profitability of the enterprise. Diversity issues, if considered, are looked at in financial and market-specific terms. Most global executives do not start their thinking process with a focus on the cross-cultural implications of their work. The HR practitioner’s role is to ensure that diversity is fully appreciated and seen to be a practical issue. In other words, the HR practitioner must be able to show in practical terms that an effective global organization is one that leverages and actively solicits diverse cultural views.

Variable Levels of Market Maturity

HR practices must be tailored to the sophistication of the market and the employees working in those markets. A comparison of almost any practice common in the United States with one in a developing market such as India, China or Vietnam will show great differences. In developing markets, practices must be slimmed down and given greater sophistication only as the workforce and management become more adept. Merely starting up a production line for soft drinks is a Herculean chore for individuals who have had limited exposure to modern manufacturing technology.

            A very important example of cultural specificity is in the area of business ethics and standards of conduct. The Conference Board, a research organization in New York City, estimates that at least 95 percent of the Fortune 500 companies now have codes of conduct, as opposed to approximately 84 percent of 250 major companies surveyed in 1991 (Zhu, 2005). This push for ethical standards has spread worldwide. Still, HR practitioners must be very careful in trying to apply standards that were developed in the United States, ethical or otherwise, to other cultures.

For example, an American company had developed standards for business conduct and planned to apply them to its business in Japan by means of a training program. The company did not fully consider how its standards would be interpreted by the Japanese and ultimately had to redesign the training program to fit the Japanese learning style (Keeley, 2005). The American company had erroneously assumed that its specific standards of behavior would apply to all people in all situations. The American culture is characterized by principles and legal codes that are assumed to have broad application, but the Japanese are much more situational. They make a clear distinction between behavior that is appropriate within the group (Uchi) and that which is appropriate with those from outside (Sato). The Japanese also distinguish between surface feelings and behavior (Tatemae) and true feelings (Honne). The company had to reexamine the standards carefully and help Japanese employees interpret where, when, and with whom those standards would apply. The American experiential training model also had to be modified to fit more closely the Japanese didactic learning model in order for it to be effective with the Japanese (Keeley, 2005).

Models for Framing Global Diversity

            A full discussion of cross-cultural issues can stand alone, but for the purposes of this paper a basic understanding of the link between diversity and business or HR practice is critical to making global diversity work locally. This part of paper presents an example of the applied model for dealing with cross-cultural differences as defined by Trompenaars (1993). Trompenaars (1993) favors characterizing behavior and its diverse mindsets along seven key dimensions. Trompenaars’s framework illustrates how different cultural groups view their individual worlds and illustrates how effective HR practitioners in a global enterprise must be aware of the impact a specific mindset may have on an HR initiative. Trompenaars’s cultural dimensions or constructs and an example of HR relevance for each are summarized as follows. Universalism versus particularism refers to the extent to which rules apply to everyone universally rather than being modified to apply to a particular situation. An HR example would be the ex tent to which a yearly salary increase is universally dictated by headquarters versus an increase based on local-country conditions.

Individualism versus collectivism refers to the extent to which considerations of personal freedom are paramount or group thinking and action are valued over individual considerations. An HR example would be the extent to which a company encourages and rewards individuals for innovative ideas versus requiring teamwork and group rewards.

Neutral versus affective refers to the extent to which an individual maintains self-control or is spontaneous and emotional. An HR example would be the extent to which a leader is aloof versus being seen and heard at all levels of the organization.

Specific versus diffuse refers to the extent to which relationships are specific to a setting (for example, this is strictly a business discussion) or include all aspects of family or personal life (anything can be discussed at any time). An HR example would be asking only certain, legally acceptable questions in an interview rather than probing extensively for information about family connections and relationships.

Ascription versus achievement refers to the extent to which status depends on background or family rather than on personal accomplishments and drive. An HR example would be giving a promotion to one’s family member instead of to a nonfamily member who is more personally qualified and experienced than the family member.

Internal versus external locus of control refers to the extent to which an individual believes in control of self and circumstances and that he or she can overcome any obstacle rather than be more controlled by the forces of nature or fate. An HR example would be an individual who is empowered and eager to take actions to improve a business situation as opposed to an individual who feels helpless and must wait for managerial approval before acting.

Past versus present versus future refers to the psychological orientation an individual has toward history and time. An HR example would be an individual who thinks almost exclusively in terms of how things were done in an organization rather than about what is needed right now or for the future.

            Each of these dimensions helps explain how and why a particular HR practice may succeed or fail in a given culture. Without understanding these dimensions, it would be easy to overlook issues of diversity and simply assume that a practice will produce a desired outcome.Wilson, Hoppe, and Sayles (1996) present a summary of how to translate cultural dimensions into HR actions and practices and make the point that all HR initiatives are grounded in three domains of human behavior: relating to others, accomplishing work, and responding to change. Most important, the successful HR practitioner must understand how diverse cultures operate within a particular dimension and then design interventions consistent with that particular mode of thinking or behaving (Wilson, Hoppe, and Sayles, 1996).

Characteristics of Cross-Culturally Effective HR Practitioners

            To be effective in the global business environment and understand the implications of diversity, HR professionals must help business managers develop a new set of competencies that go beyond the traditional planning, staffing, organizing, leading, and controlling competencies required for a domestic strategy. Global competencies have been specified by Rhinesmith (1993). These global competencies may be paraphrased to reflect a foundation of understanding that is also needed so that an HR professional can be effective in an environment with a diversity of people and of business circumstances. These global competencies are as follows:

Managing the global business environment: knowing how to develop and use multiple sources of information to monitor global trends, conditions, and resources that are important to the organization.
Managing the competitive strategy: knowing what the competition is doing (and will likely do) in key global markets well in advance in order to adjust organizational strategy
Managing organizational versatility: ensuring that the organization does not have blockages in allocating resources quickly wherever and whenever they are needed.
Managing multicultural teams and alliances: bringing people together from different cultural backgrounds within the company, as well as in joint venture arrangements, and forging them into synergistic work groups.
Managing change and chaos: developing the ability to deal with unpredictable change as the norm and being able to thrive in a chaotic environment.
Managing personal intercultural effectiveness: being able to adapt one’s own cultural-based style and behaviors to work effectively with people from other cultures.
The competencies discussed above demonstrate that business practices may often be sufficiently powerful to carry an HR initiative. For example, if a production line must run in a certain way and at a certain speed, that very fact will guide and focus the behavior of those ensuring that line speed. Although culture is important in determining how the workforce will organize to achieve that line speed, it will have very little to do with the speed of the equipment.  Adler (1997) makes the point that effective cross-cultural HR practices mix business practices with the social scientist’s knowledge of culture, values, attitudes, and behaviors as they play out across cultures. Just as an understanding of global or cross-cultural issues can be used as a tool to improve local diversity issues, the opposite is also true. The key operating principle is that differences – all differences – are valuable as sources of creative solutions to individual and organizational behavior issues. The challenge is to be well equipped and technically grounded but also prepared to act as an explorer or anthropologist who will constantly uncover and apply the appropriate dimensions of diversity to improve organizational behavior.

References

Adler, N. J. (1997). International dimensions of organization behavior. Cincinnati: South-Western College Publishing.

Bartlett, C. A., ; Ghoshal, S. (1989). Managing across borders: The transnational solution. Boston: Harvard Business School Press.

Hofstede, G. (1980). Culture’s consequences: International differences in workrelated values. Thousand Oaks, CA: Sage

Shell, M. S., & Solomon, C. M. (1997). Capitalizing on the global workforce: A strategic guide for expatriate management. Burr Ridge, IL: Irwin

Trompenaars, F. (1993). Riding the waves of culture: Understanding cultural diversity in business. London: Economist Books

Keeley T.D. (2001). International Human Resource Management in Japanese Firms: Their Greatest Challenge, Palgrave

Rhinesmith, S. H. (1993). A manager’s guide to globalization. Burr Ridge, IL: Irwin.

Schuler, R. S., Fulkerson, J. R., ; Dowling, P. J. (1992). Strategic performance measurement and management in multinational corporations. Human Resource Management, 30 (3), 365–39

Thomas, D. A., ; Ely, R. J. (1996, Sept.–Oct.). Making differences matter: A new paradigm for managing diversity. Harvard Business Review, pp. 79–90.

Wilson, M. S., Hoppe, M. H., ; Sayles, L. R. (1996). Managing across cultures: A learning framework. Greensboro, NC: Center for Creative Leadership.

Zhu C.J. (2005). Human Resource Management in China: Past, Current, and Future HR Practices in the Industrial Sector, Routledge

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