Journal of Commerce & Management Thought IV - 1

ISSN 0975-623X(print)0976-478X(online)

Global HR Practices and Strategies -

The Challenges Ahead
Dr. V. Venkat Kanna
Abstract
T he business landscape is witnessing a sea change like restructuring,
reengineering, mergers and acquisitions have became the normal operational levers
of today’s business environment. HR strategies can pay more influential roles in
global organizations than they have in the past. Due to globalization, many
organizations are moving towards HR strategies and practices that are global in
nature. Global companies face a lot of differences in management style due to the
differences in cultures across the globe. Global HRM is not a simple bundle of
conventional functions like recruitment, promotion dovetailing work force
responsibilities or ensuring satisfactory levels of wages and compensation. It calls for
astute, psychological gambits and maneuvers. Managers with cross cultural skills are
essential for the effective management of global organizations. Learning to manage
cultural differences will help managers have a global outlook, which is the key factor
for survival and growth of organizations in the global village.
Keywords : Global HRM, Cultural Skills, organizational networks

168
 Global HR Practices and Strategies... 169

Introduction
Today, globalization is the order of the day for any worthwhile business
enterprise. If globalization is to become one of the central facets of an
organization, the role of the human resource function, department, and
managers must be redefined in the context of the change. HR strategies can
play more influential roles in global organizations that they have in the past.
With HR outsourcing on the rise, the organization also faces the dilemma of
what to outsource.
With globalization cutting across the boundaries of various nations, a
firm’s ability to compete in a global environment becomes increasingly
contingent on having the right people, transactional learning systems and
optimal measures of gauging and rewarding the individual effectiveness.
Corporate world has realized the significance of Human Resources in the
new paradigm of business. It is observed that the best practice companies
recognize a link between improvements in work force productivity and the
HR strategies or practices of the organization. Due to globalization, many
organizations are moving towards HR strategies and practices that are global
in nature. Global companies face a lot of differences in management style due
to the differences in cultures across the globe.
Progressing technology and shifting values of corporate and
governments, as also the roving perspectives of consumers, are also
compelling business houses to train and develop Human Resources with
special skills oriented towards management of cross-border business. As the
economy is expanding globally in an unprecedented manner, an effective
management of Human Resources across the boundaries becomes crucial to
the success of organizations.
Definition of Global HRM
The website (www.rphrm.curtin.edu.au), in a study on the subject,
defines Global HRM as an integrated approach to formation of relationship
across borders and flow of commerce dependent upon global network of
functional centers. It says, "Global organizational networks are viewed as
dependency structures among geographically dispersed organizations that are
interrelated through both formal and informal ties across varying levels of
170 Journal of Commerce and Management Thought IV - 1

ownership. This broad definition reflects a holistic or systemic approach

consistent with the integrated view of the formation of relationships across
borders and the flow of goods and services to the global market place."
Thus, it can very easily be seen that the main task in Global HRM is to
build and nurture a culture in the corporate for establishing a wreath of
interconnections amongst its functional centers, both internal and external.
Global HRM may be defined as an art of performing "a multitude of
value-added functions". Global HRM, in fact, is the art of synthesizing a
wide kaleidoscope of cultures on the one hand and a wide array of business
functions and relationships on the other. The Global HRM techniques involve
the following evolutionary processes:
• Concept or vision of the strategies;
• Intra-team and inter-team Communication of the strategies;
• Inter-member functional coordination in accordance with the strategies;
• External business functions in accordance with the strategies;
• Managing and controlling these functions.
The HRM expert, as an initial step, thoroughly studies the consumer
patterns across cultures and evolves and adopts such methods in business that
will orient the business functions of the organization in tune with the
consumer’s preferences.
Post liberalization, the very existence of organizations are being
threatened. Therefore, a time has come where HR strategies should be linked
with the business goals of organization. Miller1 (1989) found that strategic
management of HR is an important component in strategic management and
planning. In any organization, there are three key productivity levers which
can be identified. They are:
• Staffing, Recruitment or Employment.
• Learning, Growth and organizational development.
• Compensation.
Staffing, Recruitment or Employment
Staffing, recruitment or employment is an important function in any
organization. A big part of the management conundrum is about people
 Global HR Practices and Strategies... 171

knowing what the organization needs, how to find the best people and help
them achieve their best potential for the benefit of the business. Employees
with right attitude can make a lot of difference to any organization. Today,
with HR turning into a strategic function, several other facets are gradually
embracing technology as well. Of these, noteworthy is recruitment, which
has transgressed its traditional sources like advertisement in newspapers,
placement agencies, campus interviews etc., to metamorphose itself into
online recruitment, with the intervention of internet technologies.
Staffing itself is a very sensitive issue which may involve expats host
country nationals and even third country nationals. The HR department must
be responsive to the cultural, legal and political environment of the host
country. These issues may be taken into perusal for recruitment, selection and
training and development of personnel.
Even a few years back, the idea of posting a resume or of profiling
candidature to organizations on a global scale seemed to be absurd. Online
recruitment has not only made this possible, but also commonplace. So much
is its attraction, that online recruitment is now a feasible option for many
industries. The internet provides unparalleled exactness and accuracy in
locating suitable candidates by age, location and profession, and jobs by
skill-set and location. The reach of the internet has expanded dramatically, so
companies can connect with people all over the world who are looking for
jobs (Komando, 1999)2.
The World Wide Web is not only an economical and efficient means to
recruit, but it is also a convenient tool for job seekers. Thousands of career
web sites exist and almost all are free to people searching for jobs (Balkin et.
al., 2001)3. Online advertisements help individuals search for jobs by
industry, geographic location and even by job description.
The Indian Scenario
The waves of the ‘tech revolution’ hit Indian shores over two decades
back. Among the advanced tech tools being used by Indian corporate, the
most commendable is the Internet. This has furthered the growth of the
Indian recruitment industry, which is gradually embracing Internet
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technologies. It may still be nascent in India, but online recruitment is fast

becoming one of the most exciting ways of hiring people. The Indian job
market is flooded with online recruitment agencies; big and small, domestic
and multinational. Apart from monster.com, the international e-recruitment
portal, hosts of recruitment on the Web ventures are found to have
mushroomed in the country.
Indian job portals like naukri.com and jobsahead.com are the major
market share holders at present. Online recruitment agencies are cashing in
on the techniques of ‘pull advertising’ rather than those of ‘push advertising’
by traditional media. Online recruitment is already a major success in
junior and middle level recruitment. Most of the big enterprises are tying up
with some of the best job sites and developing a proper network for getting
the best talent, commensurate to their requirement.
In a country like India, where only ten million people have access to the
Net, only recruitment still miles to go. It is to be noted that online recruitment
medium to search for the best man from among thousands in a lesser time
frame work and higher efficiency.
While many corporations are still looking for skills and experiences, a
growing number are no longer sticking with this traditional concept. There
has been a shift in the recruiting attitude since the last decade. Many
organizations today employ candidates with the right attitude coupled with
the right knowledge. Nowadays, recruitment is done in such a way as to
identify the professional attributes or competencies of the individual that are
important to the organization and to see if there is an alignment in the
strategy, corporate values and business objectives of the organization to see
if there is an alignment in the strategy, corporate values and business
objectives of the organization with that of the candidate’s. This provides a
higher likelihood of successful hiring decisions, increases potential for job
satisfaction, improves retention, and reduces the turnover. This has become
necessary, failure in complying may result in a high attrition rate (about 45%
in some organizations) which has become a nightmare. Though the reasons
for attrition may be quite different, if the recruitment process is attuned to the
right attitude, turnover can be lowered.
 Global HR Practices and Strategies... 173

A straight forward concept has gained importance – hire the right people
and build a better and more profitable organization. They are hiring for
attitude, reasoning that you can teach the right person the skills to do the job,
but you cannot transform even the most knowledgeable person into a success
if he lacks the right temperament. Organizations nowadays are aiming at
socializing their employees through training and personal interaction.
Example
• Southwest Airlines has built an entire corporate culture predicated on
this concept. The Dallas-based carrier, which earned $5.5 bn in 2002
and employs nearly 34,000 people, spares no effort to find the perfect
blend of energy, humor, team spirit and self-confidence. The first step in
its hiring process is to take a group of applicants into a room and
observe how they interact. During Southwest’s job recruitment
interview, executives may ask a dozen or so participants to talk about a
time when their sense of humor helped them or what their personal
motto is. Although most responses aren’t memorable, they provide a
clue as to how a person thinks and copes. The organization feels that it
is not necessarily the answer that a candidate gives but the way a person
answers. Next, Southwest engages in a one-on-one interview with a
recruiter. This offers a chance to get to know a person further and ask
for more detailed behavioral questions. Southwest hopes that by the
time the process are over, it will have identified the candidates who
thoroughly fit its criteria. Typically, what they want is someone who
likes being around people and has a strong work ethic, but doesn’t take
things too seriously and knows how to have fun (www.workforce.com).
Learning, Growth and Organizational Development
No organization can aim at sustainable growth without giving
importance to the growth of learning and organizational development.
Learning, growth and organizational development involve:
• Training and competency needs and opportunity identification.
• Development of curricula, outlines and materials.
• Program communication and enrollment.
• Program scheduling and coordination.
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• Competency model planning and implementation.

• Setting performance expectations and measures.
• Actively using appraisal processing and individual employee feedback.
Learning and organizational development helps in leveraging training to
match an employee to the company vision, values, culture, nature of business
and the organizational fabric, in providing guidelines for individual behavior,
performance and understanding of the company business and values and in
facilitating cultural change through the development of continuous
improvement and continual learning organizations. This result in promoting
shared organizational vision and a focus on aspects of performance those are
most critical to the business.
Example:
Motorola promotes competition among process improvement teams and
insists that most of its employees undergo a certain number of hours of
training per year. In 2002, Motorola initiated Motorola’s Functional Learning
Teams, referred to as ‘domains’. To strengthen the alignment, Corinne Miller,
an engineering leader and change agent, was selected to head the domain.
Learning engineering and development domain was first on the agenda. For
this Motorola employed thousands of engineers, and the domain were weakly
aligned with the key business needs of the engineering community. With
Miller’s appointment began a strong collaboration between the domain and
Motorola’s engineering community that led to several innovative solutions
that have increased alignment and demonstrated results.
(www.clomedia.com).
Learning and organizational development encourages the use of
strategic technology to enhance training opportunities. This result in reducing
training costs, decreases reliance on classroom instruction, compresses
training time, and supports more cost effective ‘Just In Time’ (JIT) training.
For example, Ernst and Young’s interactive desktop learning allowed the firm
to reduce classroom days by more than 60%.
Learning and development uses the action learning approach to training
to integrate business issues and learning opportunities to solve real business
 Global HR Practices and Strategies... 175

problems. This results in utilizing adult learning principles, focusing on job-

related issues and measuring effectiveness against actual business outcomes.
Many organizations are now initiating new approaches like change
management in their organization. Learning and organizational development
helps all these ideas and concepts to be assimilated and implemented in the
organization. For example, Wal Mart experienced internal changes in how
they set their strategic objectives to how they train their employees to serve
the customer because of domestic and global geographic expansion,
technology and information improvements and changing expectations of
their customers.
Learning and development in the organization provides cross-cultural
awareness, understanding and acceptance among various employees of the
organization. It promotes awareness, understanding and acceptance of other
cultures. For example, Motorola sends its managers to a two-day course on
cross-cultural communication.
A global organization uses its subsidiaries to generate, accumulate and
disperse knowledge. This also helps the subsidiary to enhance its value in the
global organization. Global intra-organizational learning aims to reinforce
the spread and diffusion of knowledge. Subsidiaries in global organizations
work as a mechanism for acquisition and transfer of knowledge.
Compensation
Organization cannot effectively review and model their compensation
without integrating it with HR practices and strategies and goals of the
organization. Also, global organizations try reinforcing strong personal
commitment through reward systems that are aligned with HR practices. The
rewards have to be in conjunction with the goals of the organization.
Compensation enhances the focus on organizational business unit goals and
results, indexes total compensation costs with company performance, and
attracts entrepreneurial employees who thrive in performance based
environments. Through compensation, organizations hope to attract, retain
and motivate their employees. It is an important motivator and can enhance
productivity if employed properly.
176 Journal of Commerce and Management Thought IV - 1

It can also be used to minimize the employee dissatisfaction.

Compensation includes:
• Setting and managing salary and wage rates;
• Setting and managing other compensation elements as well, such as
incentive or variable pay programs
• Maintaining both internal and external equity through job evaluation
and salary surveys.
Global organizations also compensate employees for attaining skills that
add value to the organization and workforce flexibility. This improves
compensation return on investment (ROI) by directing funds to individuals
with competencies and skills that have the greatest impact on the
organization’s performance, and facilities job-rotation, cross-training and
self-managed work teams. For example, General Mills rewards its employees
for acquiring new skills.
Compensation is used to provide competency based pay programs and
broad banding, which enables flexibility in rewarding individuals who
contribute to organizational goals. Compensation helps the organization
recognize exceptional performance and significant contributions towards key
organizational goals with ad hoc one-time rewards. This reinforces
exceptional individual or team contributions, rewards innovation and risk-
taking, recognizes performance beyond expectations, and global
organizations also spot recognition awards and special lump-sum merit
awards. For example, TISCO, under the ‘Shabashi scheme’, gives annual
rewards, monthly rewards and also instant Shabashi, i.e., instant or on the
spot rewards.
HR Outsourcing
Outsourcing is a major question that has not almost every HR
department. Successful outsourcing cells for a mix of client skills, business
skills and technical skills, which are incidentally found to be more among the
service providers than the outsourcing companies. Professional approaches to
the HR functions like training and development of employees, compensation
management and career counseling, go a long way in improving the bottom
line of enterprise. The benefits include lower costs of doing business and
 Global HR Practices and Strategies... 177

increase in employee morale and retention. The decreased liability of doing

business makes a strong business care for HR outsourcing.
Conclusion
Globalization brings in significant changes not only in operating
boundaries but also in the corporate HR functions and strategies.
Organizations can develop competency models to identify critical success
factors that distinguish high or low performers and integrate HR systems
(including selection, training and education, succession planning, career
development, performance management and compensation). This will help
the organization to link performance with key organizational objectives, and
further, link functional HR areas around a core set of competencies. HRM
being the most vital corporate initiative dealing with the ‘live brand’ of the
organization its people. Hence, HRM function can no longer be treated as a
mere support function. In most of the leading organizations worldwide, the
HRM function is now being treated as a strategic partner of the organization
through strategic HRM interventions.
HRM practices and its implementation in the globalized
corporation need to be restructured in the context of challenges faced by
the organizations.
• HRM practices such as training and development, performance
appraisal, communication and participation etc., need to be restricted in
order to attain world class standards. HRM in the globalized era has to
move across boundaries of culture, geography and language.
• Learning to manage cross-cultural differences will help managers have
a global outlook, which is the key factor for survival and growth of
organizations in the global village.
• In fact, a knowledge sharing mechanism is an essential feature that
needs to be nourished and nurtured in diverse global workforce.
• Leadership must be developed to face global challenges effectively and
HR professional should create a work culture that is capable of
motivating and satisfying all sections of employees in the globalized
environment.
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• Finally, the outsourcing firms should also have leaders who can garner
support of employees throughout the organization for the outsourcing
initiative.
References
1. Miller P. (1989). "Strategic Industrial Relations and HR management: Distinction,
Definition and Recognition", Journal of management studies, 24, 347-361.
2. Komando, K. "Job Hunt Made Easier by variety of Online sites", Arizona Republic, E2
(1999), April, 26.
3. Balkin, D.B., Gomez Mejia, LR and Cardy, RL, Managing Human Resource (3rd ed.
Prentice Hall of India, 2001).
4. Abbas, J. Ali and Ahmed Azim; "Across cultural perspective on Managerial problems in
a Non-western country", The journal of Social Psychology; 1996.
5. Bohlander, Snell and Sherman (2001) "Managing Human Resources", South Western
College Publishing.
6. Hodgetts and Luthans; International Management; Tata Mc Graw Hill; 2003.
7. Olga Tregaskis; Learning Networks, Power and Legitimacy in Multinational
Subsidiaries; International Journal of Human Resource Management; May, 2003.
8. Terence Jackson; International HRM – Across Cultural Approach; Sage Publications,
2002.
9. www.thecommonwealth.org.

The Author
Dr. V. Venkat Kanna is a senior faculty member in the Department of Human
Resource Development at Kakatiya University, Warangal (A.P.)
Email : vvenkatkanna@yahoo.com • Received on : Sep. 08, 2012
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