HRM Implementation in a Global Context

Human resource management is quickly becoming a contentious issue for multinational corporations irrespective of their home country. Talent and competition now know no boundaries. Companies that once dominated particular regions or demographic territories must now compete on both a global and local level. This presents an interesting dynamic as it relates to HRM practices. Larger corporation must now compete on such a granular level, creating complexities within the overall HR function itself. Countries now have different rules of law, customs, societal norms, and regulations.

What may be acceptable in the United States may very well be unacceptable in China or Germany. Therefore, multinational corporations must be especially carefully when attempting to utilize HRM practices at a local level. This is particularly true for subsidiaries that often have specialized market knowledge that the parent company may not have. Bjorkman and Lervik mention in their opening remarks that HRM transfers are often unsuccessful.

In fact, Bjorkman and Lervik state that the reasons for such failures can be distilled into implementation, internalization and the over integration of HRM practices. Much of the literature regarding this issue confirms Bjorkman and Lervik's assessment of the overall transfer of HRM practices. To begin, HRM practices are transferred to expand "Best Practices" throughout the firm. It is viewed, that spreading these practices will enable the firm to better compete on both a global and local level for talent.

It is this consistency that is believed to help establish a strong corporate culture, will eliminating any deviations from the desired HRM outcome. The problem, as outlined by Bjorkman and Lervik is that overall implementation does deviate substantially with respect to each subsidiary. In fact, two identical subsidiaries could have completely different result, due almost entirely to how they implement the corporate HRM system. This is often due to the fact that subsidiary strategies are often different.

The range of MNC subsidiary strategies are described in Perlmutter's (1969) and Bartlett and Ghoshal's (1989) well-known classifications. These classifications are outlined below ethnocentric, global strategy: control is centralized and subsidiaries resemble the parent company polycentric, multi-domestic strategy: control is decentralized and subsidiaries conform to local practices geocentric (or regiocentric as added by Perlmutter & Heenan, 1974), transnational strategy These subsidiaries often adhere to regional standards as part of the overall organizational network.

As a result, the overall implementation of HRM practices may vary depending on if the firm is ethnocentric, polycentric or geocentric. Furthermore, based on this classification, subsidiaries can have differing roles such as the local adaptation of products with their respective jurisdictions. For example, a subsidiary of General Motors may have a provision to provide a specialized expertise for the company, or they can have a worldwide mandate to provide a particular product or service (Dicken, 2003).

As a result the overall HRM strategy of multinational corporations can vary based on the extent to which firms want or need to adapt practices to local conditions. It is this standardization that is often highly coveted by multinational organizations (Almond, Edwards, & Clark, 2003). However, standardization is not without is negative attributes. For instance, standardization can lead to conflict between a company's practices and prevailing conditions of the local markets in which the subsidiary operations. This often includes national cultural phenomena, institutions and business systems.

Another challenge to the effective transfer of HRM practices is culture (Bird & Beechler, 1995; Ferner, 1997). This culture includes both the individual corporation and the society in which the corporation operates. Culture, although intangible, has a very profound impact in how HRM practices are actually implemented throughout a global corporation. What may work in one region of the world may have the completely opposite effect in another region of the world. This can almost be exclusively attributed to culture.

For example, United States corporations are often centralized, more formal and place and emphasis on avoiding union recognition. In contrast, Japanese MNCs have strong but informal centralized co-ownership with a network of Japanese expatriate managers. They are collectivistic by nature and often emphasize the group as oppose to the individual. The United States often applauds the individual who stands out among his or her peers. As a result of this stark contrast are cultures, HRM practices will be implemented differently.

This core values are often strongly embedded with their respective regions. American's have a core value of individuality and pursuit of one's own happiness. If an organization attempts to impede on this core value a clash arises that may adversely impact the overall HRM practices of the MNC. Cultural values are related to an organizations ability to achieve a legitimate standing with the overall society in which they function. This is accomplished by adhering to these core values.

However, HRM practices will be under threat where congruence with these core values is not achieved. Finally and possible the most important challenge to the effective transfer of HRM practices is the local labor market itself. Although this may seem obvious, the overall dynamics between the local labor market and the parent company's HR ambitions may be at odds with each other. For example, local regulations are most likely to resemble the local practices with the region.

However, internal issues with the local subsidiary often conform to the parent country practices. This creates an interesting dynamic between the parents company values and those of the prevailing local subsidiary. The firm must therefore weight the demands for internal consistency against the demands for local responsiveness. In addition the macro environmental factors prevailing in the local country may warrant a different approach as it relates to HRM practice and implementation. For example, a very contentious issue, particularly for U.S.

firms, is the overall wages and work conditions that their international subsidiaries are exposed to. Aspects such as minimum wage, mandatory working hours, working conditions, and taxes all vary within a local country. Should the parent adopt the home country standards even though the local country may have an easier regulatory environment? Is it ethical to do so from an HRM standpoint? Nike for example experienced this with is labor and HRM practices in Asian countries.

Due primarily to American backlash, the problems associated with harsh labor conditions, low pay, and no benefits were quickly adjudicated. However, it is paramount that the parent company has proper channels, assessments, and protocols to make these decisions prior to the negative publicity. This remains quite difficult as the local subsidiary is operating in a local labor market and is thus subject to those operating standards.

What may seem a low standard to the parent company may be adequate as it relates to the local subsidiary? This creates complications for an HRM standpoint as management must decide on how to properly execute the desired standards of the parent company. Thankfully, the literature on how to best accomplish this is abundant. The parent company can properly cater their respective approach to the design of the overall international HRM system. The main approaches are listed below.

• adaptive: low internal consistency with the rest of the firm and high external consistency with the local environment -- little transfer of practices (Taylor, et al., 1996). • exportive: high integration of subsidiary HRM systems across the company-- replicating practices developed at head office (Taylor, et al., 1996). • integrative: substantial global integration with an allowance for some local differentiation -- two-way transfer of HRM practices between head office and subsidiaries (Taylor, et al., 1996).

Now the overall choice of HRM strategy is largely dependent on the international strategy that the corporation elects to adopt. This international strategy has implication on the effectiveness of the transfer of HRM practices. There are three primary international strategies as it relates to HRM. The first is multi-domestic. Subsidiaries that are seen as an independent business should elect to use the adaptive approach to HRM systems for effective transfer of practices. The second is global.

These subsidiaries are managed as dependent businesses; therefore an exportive approach to HRM systems is most appropriate. The third and final strategy is transnational. Under this approach subsidiaries are managed as interdependent businesses, therefore an integrative approach to HRM systems.