Globalization and HRM in Multinational Corporations

Introduction to Strategic HRM and Globalization

Strategic Human Resource Management (HRM) concerns the approach taken by an organization toward the relationship it pursues with personnel, as contextualized by the strategic elements defining the operation as a whole. This encompasses all aspects of the utilization and application of human skill, labor, and leadership. The dynamic produced between organization, leadership, and personnel — according to the theoretical model — must be approached with careful consideration of key characteristics of the organization and the externalities of the industry and market. These externalities are of primary interest to this discussion, particularly today as organizations continue to navigate periods of sustained economic uncertainty. The sharp contrast between such periods and the torrid global economic growth of the prior decade presents a particular challenge to organizational leaders operating within a strategic HRM framework. As the discussion here indicates, HRM calls for adaptability in the face of organizational change.

There are myriad theoretical constructs used to further deconstruct the implications of HRM, and these tend to reflect a spectrum of often conflicting perspectives on globalization and its consequences. Radical Globalization theories and Culturalist theories effectively demonstrate the complexity of the subject, comprising two essentially incompatible ways of understanding globalization. The former proceeds from a perspective of convergence, expressing the idea that the nation-state is in a phase of erosion, whereas the latter proceeds from the idea that certain particularly powerful nation-states are inherently dominant in the process of globalization. To this extent, each represents a distinct lens through which to interpret the outcomes and consequences of the trade liberalization currently taking place.

Radical Globalization Thesis and HRM Practices

The theory of radical globalization inherently rejects the idea that any single cultural identity is responsible for the thrust of the international community. Instead, the view holds that private multinational corporations more directly control the form that globalization takes. Morley and Collings (2004) report that "proponents of the 'radical' globalization thesis argue that national economies are being overrun by an emerging system of global economic organization and control where decisions are made at the global level without reference to the nation state. It is argued that this is a reflection of the relatively limited ability of nation states to regulate the activities of these global conglomerates which will, in turn, lead to convergence of national economic policies, economic organization and management practices toward a single 'best practices' model." (Morley & Collings, p. 478)

It should be borne in mind that when Morley and Collings refer to a "best" model, this is meant only to imply that a universality of practice is being approached based on the preferences of international corporations. Despite the terminology, Morley and Collings recognize that this pattern often carries grave consequences. One of the most prominent examples is represented by Wal-Mart. Wal-Mart is a particularly interesting case for examining HRM principles in light of globalization patterns, given its remarkable success as a retail organization alongside its continued struggles with a troubling record in the treatment of workers in developing nations.

Labor relations is one of Wal-Mart's areas of greatest weakness, despite the company being one of the world's largest retailers. It is consistently cited as possessing one of the most troubling records for worker treatment among major globalization employers. Criticized for its exploitation of laborers in contexts where laws protecting worker rights are particularly weak, as well as for its resistance to union organization, the consumer giant has helped to produce a "best" model for global production that carries considerable negative consequences for the way other corporations recruit, retain, and relate to global employees. Rosen (2005) reports that "Wal-Mart is now notorious for wage abuse, sex discrimination, and antiunionism. They impact all Wal-Mart's sales associates, from managers to clerks, and women in particular who comprise 70% of Wal-Mart's employees, most at non-supervisory levels." (p. 31)

In its emphasis on reducing retail costs to the customer, both the quality of the employee experience and the treatment of workers have tended to suffer considerably. Despite this, Wal-Mart has continued to enjoy massive financial success with little to no intervention on the part of the international community. Its enormity means that other retail organizations must engage similar labor practices simply to remain economically competitive. This produces what Morley and Collings call the "Bleak House" effect, where the irrelevance of nation-states in creating regulatory oversight has allowed the interests of multinational corporations to preempt all other priorities, including those relating to humanitarian concerns.

The Culturalist View of International HRM

As noted at the outset of this discussion, there is another view of globalization which considers Human Resource Management through a cultural lens. Though it regards globalization as no less destructive, it considers the impact less directly instigated by the actions of private enterprises. Instead, the culturalist view denotes — through a perspective of divergence — that complex racial, geographical, and social forces are at work, and that these are significantly responsible for the vagaries of international trade. In particular, where the radicalist perspective argues that the nation-state is losing its primacy in the global landscape, the culturalist view argues that globalization is allowing hegemonic nation-states to further extend their influence over world affairs and, more particularly, over world resources.

The article by Ardalan (2008) contends that "globalization constitutes an irreversible process, and that Anglo-American norms and values underwrite the culture of the new world. Americanization is associated with globalization because the U.S.A. is the sole superpower. The global network of culture is the most powerful social and political force in the world. It is this global network of culture that Islamic republics are fearful of and forces them to separate their people from the modern world." (Ardalan, p. 518)

This points to what is certainly the most salient example of the culturalist imperatives of globalization. The machinations of the War on Terror demonstrate the especially violent extremes that may be channeled through this mode of internationalization. The abundance of such commodities as petroleum in the predominantly Muslim Persian Gulf region has attracted the hostile interest of developed nations such as the United States and Great Britain, which have in turn used this interest as a justification to impose democracy, free-market capitalism, and constitutional governance upon selected states. This mode of globalization has been shown to carry clear cultural prejudices that place a higher premium on Anglo-American modes of government and economy.