HRM Issues in Global Business Expansion Introduction

HRM Issues in Global Business Expansion

Introduction to Human Resource Management

In the last several decades, human resource management (HRM) has evolved into a major component of modern business organizations (George & Jones, 2008). In principle, HRM functions have always been part of professional business management; however, it became a distinct professional field with dedicated specialists only since the latter part of the 20th century. Generally, HRM consists of all of the processes and functions that relate to personnel management, from the entire cycle in between recruitment and retirement or alternative ends of careers such as voluntary departure and involuntary termination. More specifically, HRM departments typically handle the hiring process, new-employee orientation and training, the resolution of personnel issues and conflicts, benefits administration, employee performance review, and post-employment debriefing processes (George & Jones, 2008).

Contemporary Human Resource Management in the Age of Globalization

In the age of globalization, HRM departments must address myriad potential issues that ordinarily do not arise within strictly domestic business operations (Robbins & Judge, 2009). For example, business organizations intending to expand into other sovereign nations must comply with applicable laws and public policies that may differ substantially from those that apply in the domestic business environment. More generally, social norms, values, expectations, and practices also vary substantially from country to country. That means practices and behaviors considered normal and appropriate domestically could violate social etiquette and informal business protocols in other nations and vice-versa.

Case Study -- Netflix

Netflix, the American-born enterprise that provides movies for private rental by mail through a subscription-based service, is currently on the verge of expansion into international markets (Johnson, 2010). According to both internal representatives and external industry analysts, that proposition will require the organization to negotiate major potential issues. Among other things,

"There will also be a lot of red tape to deal with. Going global for anyone is not easy from a legal standpoint, and for a company like Netflix it may be even more complex. It has worked hard to forge deals in the U.S., but in each new market it will start from close to zero. And although film studios are global entities, their national operations often work independently. Local decisions are often based on local conditions. Sony Pictures India, for example, has different objectives from its parent company." (Johnson, 2010)

More particularly, the decision to expand internationally involves much more than calculations and projections about factors potentially affecting just revenue and considerations about traditional operational management issues. Human resource management functions may require significant adaptation to enable the organization to accommodate local business practices in a manner conducive to profitable business management.

"But perhaps the biggest issue could simply be the cultural divide. Netflix needs to be incredibly careful in the assumptions it makes about foreign markets. It's no secret that major U.S. internet properties trying to enter foreign territories don't always fare well. Craigslist, despite being ubiquitous across America's major cities, has struggled to gain traction elsewhere. Yelp's European adventures are taking some time to gather speed. And some successful exports (Yahoo! Japan, for example) are effectively just franchises owned by local investors."

(Johnson, 2010)

Human Resource Management Considerations in International Expansion