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Globalization Impact on IHRM and DHRM

Globalization Impact on Domestic and International Human Resource Management

Name :Hathadura Mudith Darshana De silva

Student Number : 000109468

Date.: 09th Dec 2011

Globalization Impact on IHRM and DHRM

Globalization impact on DHRM and IHRM is an utmost important area for the every business organization due to its characteristics of making the decisions rather accurate and making planning processes more effective.

We were given the assignment with the objective of analyze ans evaluate the impact of the Globalization how could affect and influence on domestic human resource management as well Global HRM system. Globalization is a concept that could affected for an organization in way, may be for its decision making strategy, future market, brand image, media handling or other. But in this assignment Im going to emphasize mainly on differences of Global Human resource management and domestic Human resource management which is UK HR framework.

Globalization Impact on IHRM and DHRM

1) Globalization

Its a process that could be explained as interaction, integration, connectivity and interdependence of different nation through-out the world. World development is directly linked with Globalization and it may an invisible factor which included all glossaries. Before the concept of Globalization, it has to identify the concept of Internationalization, which was come to the world first and before been a global village we are inter connected with few nations to overcome our domestic issues such as international trade, exchange of currency and free labor movement etc. This was started in 1800s in the Great Britain while the industrial revolution. Mean time this industrial revolution has being spreading in Prance, German, Holland, Italy, Switzerland and other European countries. This was the major highlighted turning point of the history initiated to Globalization and human development. The flow of Globalization process is still continuing and will be. Internalization discusses regarding two nations or among nation, trade, international relationship and common affairs related to them. But Globalization considered about many variables regarding current and future related Global vision of economy, development, food protection,

Globalization Impact on IHRM and DHRM

environmental issues, HRM, communication, transportation, trade, education, technology, peace and so on. Multinational corporations mark the second turning point of Globalization. Dutch East India Trade Company was the first ever MNC as history recorded. To make the business activities easier around the world, large business organizations like; Uniliver, MacDonalds, General Motors as well Microsoft need to spread their business network for all countries around the world. While growing of MNCs and MNEs throughout the world the business technologies they introduced to the world become more free and easy for the customers. E-commerce, E-money (e-volute, credit & debit card), E-banking, E-shopping are few of concepts introduced by MNCs with connect in other services. With the Globalization there are many things changed, added and removed in HR and other areas in world. Because Free movement of labor among countries (European Union), free technology

transmission through MNCs (KFC, McDonalds), use capital intensive methods and spread free communication methods (Skype, E-chat) etc. Globalization process has influenced on every nation, every culture including remote people (Ethiopian, Sudan) as well developed nations (Australian, Canadian). Coutry like USA can still influenced to Iraq and Iran for some military actions beacuse we all

Globalization Impact on IHRM and DHRM

are linked by a same framework. Someones harmful action might get other affected mistakenly or other since all are combined. When we look at the past century even at past few decades there are many thing has been added to our daily life such as fast foods, internet, hybrid technology, highways, free communication systems etc. It shows the development and people are connected with the world more than they have been earlier. Without a physical flow we can send money from one corner to another in the world that is how Globalization has helped us. Someone may think that Globalization is about international trade or mobility of human capital or else international communication. By now we all from morning to bed depend on impact of Globalization because no a country can today produce each and every goods and services for their demand, no a country could process development projects at a least cost without others fund and support. Not only economical and political background but also social, cultural and religious atmosphere also gets affected by Globalization in several ways by today.

Unlike earlier many of employees willing to work at a global atmosphere right now and IHRM policies are being preparing for them to create a better world by International bodies. Though some

Globalization Impact on IHRM and DHRM

developing countries and social republic countries make a sound against Global level business, they are the people who contribute more than 2/3 of total world production. In year 1992 the General Motors Company recorded the highest revenue of USD 134 and it was greater than the largest GDPs at that period. By now even if we are affected by restrictions a student in China or Africa cannot go abroad to get their PhD or a businessman in Russia cannot open a new firm at Bangkok.

To get done the business ultimate goal, As to identify the reason behind to conglomerate the business of multinational corporations are, get through the organizational ultimate mission and get done the business targets at global and individual country level respectively.

2) Human Resource Management

Not like in earlier now it focuses on how to recruit and retain those human resources to run the business with a long term vision. Its really hard to find an employee who works only for a company since he joined. Human resource management currently talks about how to manage man capital effectively and efficiently while cost

Globalization Impact on IHRM and DHRM

minimizing. Beginning to end it is included all functions of recruiting, hiring, induction, training and development, motivation, performance appraisal, retirement benefit and so on. If an employee works for a company for a short term of period its a high unbearable sunk cost to an organization. Then mind should focus on how to retain, recruited person while make him motivated. Only at that point HR policy is effective and successful. For a seasonal and temporary jobs this may not suitable non-other than permanent title. Man power management came with those kinds of nonpermanent occupations and Human resource Management is very comprehensive and complicated function other than a social need. HRM is The process of procuring, allocating and affectively utilizing human resource in a corporation

3) International Human Resource Management (IHRM)

The importance of a globally accepted human resource management system is to become a successful, professional organization worldwide, east to west and north to south. And adding some glue for that, it can be defined as IHRM practices International Human

Globalization Impact on IHRM and DHRM

Resource Management is the study and application of all human resource management activities as they impact the process of managing human resources in enterprises in the global

environment. International human resource management is the process of allocating, procuring, and effectively utilizing human resources in a multinational corporation. 3.1) Arguments against IHRM When something come to a Global context the possibility of make arguments is common to IHRM as well. The domestic setting adapted to a Global frame work is unlikely a implementing a Global framework as new. The main factors point out against; 1. IHRM may involved in greater level of risks and uncertainty compared DHRM Eg; cultural and social perspectives, action taken by labor union 2. IHRM is more complicated and contrasted than DHRM thus IHRM is a combination of more heterogeneous functions Eg; no of functions and its inherent nature is different 3. Rather DHRM, more functions, practices and policies included in IHRM since it is applicable to entire world 4. High rate of change involved with IHRM because in time to time domestic practices may change 5. It is highly required that industrial relationships and contribution of employees personal lives

Globalization Impact on IHRM and DHRM

6. Unlike DHRM, it is highly affected and influenced by set of external factors Eg; global economy, international labor policies, religious factors

IHRM is much broader when compared to DHRM since IHRM is a set of aspects of cross cultural HR behaviors and activities. The main functions included in IHRM, procure, allocate and utilize where MNCs managers of home country has to focus on Global issues like; hiring, orientation, reallocation, training, motivation systems and supportive services (man power management) as well. If it takes payroll and compensation function for an example, in the IHRM framework it has to deal with many nations pay schemes and relevant to that taxation, foreign exchange fluctuations, internal economic policy changes must take in to consideration. If USA (Host country) decides to appreciate their currency while domestic (UK) depreciated then high demand elasticity of forex currency will be generated. In the mean time buying power of UK currency against USA will be fluctuated unless this will not considered employees will bargain against their employers. While managing those aspects it is not that much easy to select, train, motivate employees around the world as well.

Globalization Impact on IHRM and DHRM


. 3.2) Dimensions of IHRM

Mainly three dimensions as HRM activity, country type and employment level which could be seen in IHRM system. Procurement, allocation and utilization are the three of HR functions included in IHRM.

Three Employments Managing Level in IHRM Hierarchy;

Parent /Home country national (PCN) Host country national (HCN) Third country national (TCN)

Globalization Impact on IHRM and DHRM


Example :  Parent country employees (PCN)US citizens. MNC-IBM Parent country employees (HCN)Indian citizens MNC-BP  Host country employees (HCN)-Singapore citizens MNC-IBM (Singapore) Host country employees- Indian citizens MNC-IBM India  Third country employees (TCN)-employees working at headquarters (Home country) or subsidiary (Host country) but not belong to home or subsidiary country who are source of labor. MNC- Uniliver UK-Indian and Japanese citizens are engaged on UK operations. 4) Globalizing Human Resource Management Processes HR is the utmost and expensive asset which cant be measured in terms of money but exclusively considerable to manage a corporation towards to achieve its goals. The HR policies and practices may be different nation to nation, one company to another. It

Globalization Impact on IHRM and DHRM


s comparative but to overcome issues against child labor, sexual harassment in working place, restricting working hours, reduction of leaves per annum should be highlighted when it is stating a HR policy for entire world.

IHRM is Internationally accepted human resource management policies and practices used by MNCs and MNEs for planning, organizing, staffing and controlling their man capital

The process of Global HR (IHRM) it is included;

Global staffing Global leadership development

4.1) Global staffing

In a conglomerate business world it is needed to recruit global brains with overall work knowledge. Human capital must be absorbed by a series of global experiences, expertise knowledge, open and different thinking in a vital mind. Though it can be stated easily, it is not that simple to convert those words in to HR process in an organization. The world top brains who are employed in

Globalization Impact on IHRM and DHRM


MNCs or any other corporation are not born with global brains and minds (Eg; Bill Gates-CEO Microsoft, Paul Polman-Group CEO Uniliver, Allan R. Mulally-CEO Ford). Through a long process of learning they got to know the world. Such kinds of brains are in a corporation at a substantial cost to such business body. The main concern or the issue faces by Global HR is seeking rational business brains and an ability to think of future needs and risks.

4.2) Global leadership development

Main objective of Global leadership development is, to create supper brains that can take the leadership to run the global business operations effectively across the world. It will focus on creation and development of future leaders with lot of skills, talents, experiences, expertise and long term vision to lead the global firms while providing broad opportunities to survive in international market level. A Global leader must have a mind to understand and accept the cross cultural believes and norms as to create global accepted business culture. The importance of HR functions is not bound by a country HR policy when a personal becomes as a global leader. Leading cross cultures are more complex than the leadership. A person with a vision of become a global leader has a enriched eye

Globalization Impact on IHRM and DHRM


and a process of approaches to meet the future challenges and the way they interact with different minds will show their success when time to come while they reach to top.

Leaders with cultural sensitivity can be more effective than those


5) Domestic Human Resource Management (DHRM) This includes the HRM functions, activities and practices relevant to a single country. Domestic HR practices in UK may different from HR handling in USA. For an example; in USA hourly wage rate is higher than international standard rate. The HR practices are contrasted and contradictory when time to time, individual to another. We cant be concluded that best or verse since all are comparative among nations cultural and social patterns. Local employees have Eg; UK labor law is relevant to whole state, but among the people who in UK may have different HR practices which only practicing among the sub set or sub cultures. The main HR functions included as follow;

Globalization Impact on IHRM and DHRM


HR staffing (Recruitment, hiring induction and selection) Performance Appraisal (motivation, promotion and demotion) Industrial Relations (relationship between employer and labor unions and tribunal) Training and development (offshore training, out bound training) Benefit and compensation administration increment, overtime and retirement benefits) (payroll,

Above HR functions might get affected and influenced or changed by the other nations when they reach to international level.

5.1) UK Human Resource Management Same as other developed countries, to manage country work force and conduct UK government has a standard HR policy. They focus to get the best from work force to get done countrys economical and political goals. UK aim to recruit, hire, develop, train, motivates and compensates their employees based on standard HR policy. UK government keeps each employee history records rather than just a number and name.

Globalization Impact on IHRM and DHRM




In this assignment it tries to emphasize the theory based on IHRM and DHRM and how they have been affected by Globalization. It can be concluded that there are differences among IHRM and DHRM.

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Globalization Impact on IHRM and DHRM



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