Strategy to Manage Human Capital in a MNE

HRM

A Strategy to Manage Human Capital in a MNE

Multinational enterprises may face many challenges, one important issue is the way in which human capital is managed and leveraged in order to create value. Most large organizations will have a variety in their employee base in terms of cultural background, native languages, religion and educational backgrounds. As the firm expand internationally the variety of employee differences is likely to increase. Most organizations have strategies that they believe will be fair to the employees, these are often based on the concept of equality. It is argued that if all employees are treated in the same way, there is no difference that could lead to discrimination or bias. This approach to managing employees is based in the requirements of anti-discrimination legislation, where the optimal approach was deemed to be that which would reduce any potential feeling of unfairness as well as meet legislative requirements (Monga, 2008). However, this approach treats all employees the same, and may be argued as limiting the potential for an employer to benefit and leverage the differences which exist in order to gain value from them. It maybe argued that a more valuable approach will be to undertake a proactive diversity management strategy.

Diversity management is based on the idea that employees are different, and that recognizing the differences found within workers, some of which may be visible, and some which may not be easily visible, will be of benefit to both the employees and the employer. Diversity management may recognize a wide range of differences, including those found across international borders, including, but not limited to, ethnicity, religion, culture, gender, sexual orientation, educational background, and social status (Konrad, Prasad, & Pringle, 2005). Concept of diversity management may also be argued as more than simply a recognition differences, it is a tool for which to implement a policy of cultural pluralism, and go beyond legislative requirements. When it is implemented, it also has the potential to reduce the potential the segregation which may occur between different social groups as a result of the way individuals will gravitate towards others they identify with (Konrad et al., 2005).

Diversity management has the potential to increase the quality of the employment relationship, by recognizing differences, and facilitating management strategies which accommodate the different needs of the individual employees (Bassett-Jones, 2005). However, it has been argued as being "a double-edged sword," as giving employees equal respect and facilitating different treatment due to underlying diversity also has the potential to stimulate the perception of unequal treatment, and potentially create a negative environment (Bassett-Jones, 2005). Diversity management involves providing equal respect for all employees, and their needs, so that employees feel that they have equal respect, opportunity, and consideration of their differences (Bassett-Jones, 2005). The implementation may be undertaken in an international basis, were diversity is recognizing employees within the organization in the same country, but it may also be undertaken on an international basis.

There has been the identification of two different models which are frequently used in the way diversity management is implemented; where employees are expected to blend in, and where employees are set apart (Thomas & Ely, 2006). The model where employees are expected to blend in is aligned with a reactive rather than proactive model, and is only a small step beyond the meeting of equality requirements for legislation (Thomas & Ely, 2006). The second approach is more proactive, and can incorporate the allocation of specific tasks to individuals based on their background, and inherent knowledge, skills, or even contacts that are associated with a differences (Thomas & Ely, 2006). Research has indicated that the proactive approach, where implemented with equal respect for different employees, has the greatest potential to add value for the employer (Thomas & Ely, 2006).