ExecutiveSummery Rapid change ofthe prevailing economic environment, firms becoming international due to theglobalization and becoming multinational corporations (MNC). This has impactedto the change the human resource function from personnel management to theStrategic Human Resource Management. HRM is considered to be the one of thedifferentiating factor of getting the competitive advantage of MNC. However,the complexity of the business, but firms need to be consistent in theirpractices (Best Practices) is also important. This have created a new set ofchallenges to the multinationals to have a balance between organizational goalsand how to drive the human resource to achieve those objectives. Becauseapplying consistent HRM practices are important to retain the competent andcommitted workforce.
But challenge is to apply the consistent practicesglobally and it also influenced by the social, political, technological andsome various other factors.This paper alsoreview theoretical change in HRM landscape some models being used and itsprinciples and its applications. In essence, this paper also criticallyevaluates the cross-cultural challenges which may face in attempting to use HRMbest practice to drive change and manage individual/organisational performancein a multinational context and how to overcome such challenges with specialreference to the recruitment and selection function and also it assess HRM bestpractices and organisational behaviour (OB) tools which can be used in themanagement/leadership of individuals and the organisation. Introduction In the globaleconomic environment where competition changes rapidly, human resource functionhas significant and challenging role to play, to influence the Multi NationalsCorporations (MNC) performance by improve efficiency and maximize wealth,mainly due to the technology change, deregulation of rules, globalization. These changeshave created cross cultural challenges in attempting to use HRM best practicesin MNC and also impact to the individual and organizational performance, whendriving the ‘change’.
Howeverorganizations start recognizing people as important assets as businesspartners, and this changed role engage more activities and practices makinghuman resource management function more dynamic operation designed to maximizethe human performance specially in MNC. Attraction and retention of thecompetent and committed workforce is a key to differentiate and gain the competitiveadvantage over the rivals, but what recruitment and selection policy or thepractice should be used is key decision to make by the MNC. Success or failureof the subsidiary is mainly depend on the decision made by the parentorganization. Changing the HRMLandscape PersonnelManagement to HRM and SHRMThe HumanResource Management function initially dominated by the activities such asadministration and payroll. But the development and rapid change of theeconomic, political, social factors, then human resource functions focus on thetalent management, succession planning, learning and development, PerformanceManagement.For ageneration, managers had been seriously constrained in terms of how theyapproached the people-related aspects of their activities (Taylor, 2011). PersonnelManagement refers to a set of functions of activities (e.
g. recruitment,selection, training, salary administration, industrial relations) which doesnot have significant relationship between organizational goals and objectives(Ruth et.al, 2015). Personnel management functions were conducted isolationfrom one another and generally without any consideration of their impact onoverall organizational effectiveness by line managers as a part of theiroverall responsibilities (Ruth et.al, 2015).PersonnelManagement was becoming human resource management with the change of the existingfunction due to the rapid change of internal and external factors whichaffected to the organizational objectives and also it changed theorganizational approach towards the people related aspects and focus onstrategic orientation.
eg: individualized pay arrangement and formal industrialrelations are no longer valid, due to a current context of multinationalorganization with new type of employment arrangement (part time/outsourcing,flexi hours).According toArmstrong (2006) Human Resource Management (HRM) is defined as a strategic and coherent approachto the management of an organization’s most valued assets. The people workingin the organization, individually or collectively contribute to the goal/s ofthe organization. HRM is primarily concerned with how people are managed withinorganizations, focusing on policies and systems (Collings & Wood, 2009).HRfunction in multinational corporations specially designed on maximizing theemployee performance to achieve employer’s strategic objectives.
The key resultareas of the HRM are employee recruitment, training and development,performance appraisal, and rewarding (e.g., managing pay and benefit systems)(Paauwe & Boon, 2009).However HRMrepresents more micro approaches (eg: activities, process and functions), thenStrategic Human Resource Management (SHRM) came to role as a macro perspective(e.g.: strategies and policies) with the emergence of MNC.
Hard Vs Soft ApproachIn the humanresource field there are two widely accepted approaches, when it comes toemployees’ management and control, the “Hard” approach and the “Soft” approach(Truss et al., 1997). The “Hard” approach stresses on the performancemanagement and employee is measured as any other resource in the organization.On the contrary, the “Soft” style gives substantial value to the personnel, inview of them as an essential asset (Gratton, 1999).
In this slant, theobjective is to fit in the MNC’s strategy with employees’ commitment,motivation and trust in order to achieve flexibility throughout the proceduresand at the same time gain the best possible quality (Guest, 1987). Bothapproaches are theoretical since in real operations, HR managers use bothapproaches (Truss et al., 1997).There by multinationals faced many challengesin selecting the correct approach in recruitment practices.eg;Human Resourcefunction was influenced by the Resource Based View (RBV).
The concept wasinstrumental in developing the strategic human resource management(SHRM).Because in RBV, firm internal resource as a source of competitiveadvantage and business strategy requires unique set of behaviors and attitudes.There (RBV) have implication on HR in formulating & implementing strategy.Hence Humanresource is an unique and it has the potential to grow and deliver results bydevelop employees and allow then to continuous learning as organizations expects which may help to change the rules of the game bycreating new paradigms.
There by Human resource become human capital of thatfirm can gain the competitive advantage over other firms.In order tosustain the competitive advantage MNC should focus on the developing the humancapital specially on knowledge, skills and attitudes which become them uniqueassets in the organization. This approach sometimes influenced by the level ofcontrol of the Head Quarter has over its subsidiary and what type of humancapital is required.eg most cost effective method is develop internal employeesor outsourced staffMarchington andGruguli (2000) stated that the “Best Practice” model is based on universalism.Human Resource activities should be treated as set of HRM practices which canimprove the performance of the organization regardless of the size or location.Best fit model insists that only way to improve the performance of theorganization by aligning HR policies and procedure with the business strategy.
Best fit is more open than best practice, because it does not consider thefactors which affect to the HR approaches such as cross-cultural challengesspecially in MNC.Approaches of bestpractice to be implemented in the MNC Implementinginternational policies in the subsidiary which are considered to be the bestpractices, it is important to decide what type of best practice to be adoptedin the subsidiary.eg; recruitment These best practices in HRM can be consideredas context specific or context generalizable, depending on its usefulness tothe subsidiary, may be the outside the location in which it was developed(Taylor, et al., 1996). • Ethnocentric/adaptive: this slant has low internal uniformity with the rest of the firm andhigh external uniformity with the local environment (subsidiary) it has little allocationof HRM practices. • Polycentric /extortive:Implementing the HRM practiced develop at head office and imitating the same inthe subsidiary. Head office has greater governing power of the subsidiary. Thishas greater autonomy for the HQ and subsidiary become adopters of HRM practicesof Head office (Marginson, 1994)• Geocentric /integrative: This approach poise between Head office and subsidiary when instigatingHRM practices.
It allows some local distinction and two-way transfer of HRMpractices amid head office and subsidiaries.i.e.,ethnocentric, polycentric and geocentric orientations (Perlmutter, 1969) have anoteworthy influence on configuration of subsidiaries HRM practice.Multinationals may change their HR policy orientations with their stages ofinternationalization (Adler and Ghadar, 1990; Banai, 1992). Monks et al.,(2001) in their study revealed that Irish multinationals developed more formaland pro-active HR policies, and appointed a higher number of expatriates in theoverseas subsidiaries with their increased international operations.
Hardly anymultinationals can be found that provide a perfect fit with those orientationsin the subsidiaries.Recruitment andSelection in Multinational Corporations (MNC) (Best Practices, Challenges, Recommendations)Recruitment andselection is the major function in human resource management. Attracting theright person to the right job (most suitable person) in which improves andsustain the organizational performance. Recruitment is the process of searchingthe right person for employment and simulating them to apply for jobs in theorganization while selection involves screened the candidate and choosing themost suitable person. Success of multinational depends on the how well talentis acquired, developed and retained. Multinationals always direct subsidiary tofollow consistent human resources practices specially in recruitment andselection. Because of the competition, organization is required the rightperson to the right job and this competition is not local and any wrongrecruitment and selection decision could be affect to the overall image of thecompany.
There is high resourceinter-dependencies for specific HR decisions, especially recruitment andselection process of higher level managers (Martinez and Ricks, 1989). Sometimesinterviews, selection has significant influence by the parent company. Howeverhardly any multinationals can be found that provide a perfect fit with HRMpolicy implementation of the subsidiaries.
Management Standardizationof jobs Standardizationof jobs often a best practice of most of multinationals. Howeverstandardization vary among the nature of the job e.g. functional or technicalor level of the jobs e.g.
experienced or apprenticeship. Technical jobs arevery easy to standardize where as it is very difficult to standardize thefunctional jobs. By standardizing jobs, it is very easy to attract people inthe global and it has little disadvantage in attracting people locally. However, subsidiary management can modify somelocal market sensitive jobs such as employees working in the marketingdepartment, but they need to send an explanation of those changes toheadquarter.
It is observed that the pressure to standardize job descriptions,job specifications, and other recruitment and selection activities is linkedwith the control and co-ordination process of the multinational headquarters.Level of control over the subsidiary by the headquarters depends on the extentof exports to foreign markets. Parent companies become more concerned about thesubsidiaries’ HRM practices when increasing the exports to the foreign market.MNC willinfluence to the subsidiary to develop standardized HRM practices in thesubsidiary. Degree ofinternationalization of the parent company will vary depends on the level ofownership of the subsidiary. HRM standardization processes are related withthose stages (Monk et al.
, 2001), If the level of ownership is high, theinfluence on the HRM practices to make them international standards is alsohigh. But MNC needs to understand match between corporate strategy, structureof the subsidiary, and HRM practices. Because the Born global concepts mightnot work as expected in the subsidiaries.
HRM practices ofMNC are treated an innovations or method of developing management, employees ornew model to the subsidiary. The influential power of the MNC is depend on thevarious societal factor tor of the counter which subsidiary isestablished. E.g.: MNC can implement therecruitment and selection practice as they wish, but a country like Bangladeshwhere the unemployment rate is very high an ability to finds a job is very low.Then, there will be a huge gap between the MNC expectation and the actual.
Soit is important to analyses micro organizational level and the country’snational context, before implementing any HRM practices. Parent company alsoneeds to control the behavior of the subsidiary, and consequently, developsubsidiary HR policies that do not create any problem for control andcoordination mechanisms (Beechler and Yang, 1994; Coller, 1996). Selecting thesource of recruitment and selection Choosing themost effective and appropriate method of recruitment and selection method issignificant multinationals. By doing Job analysis organization can understand wheresuch position is required or not to the organization and then need to designthe job description and job specification to assess the relatively importanceof the job.
Mostly multinationals use both internal and external method of recruitmentand selection methods with focus is placed with the strong performance of theemployment relationship. However degree of direct involvement is based on theperceived value of the human capital management and governance of theorganization. Howeverambiguous HR planning translate in to specific HRM policies and practices whichcreated problems in recruitment and selection. Multinationalsuse multiple recruitment process rather relying on the single source of methodwhich will help to evaluate the candidate more effectively. It is important toaccess the fairness of the process and fairness of the outcome of recruitmentand selection. How to reactcross cultural challenges -Strategicallyminded HR specialists have to react to these changes in their company’sbusiness environment and have to anticipate future demands. In order to respondeffectively they have to develop and co-ordinate policies and practices thatare flexible and adaptable to the demands of the different requirements of theorganization.
Management must understand the organizational cultures andstructure that they want to build in with the organization, based on theobjectives of the organization, management can influence the behaviors of theemployee by creating unique value system. Organization that values thecommunication, accountability and transparency are the once that a mosteffective tools which organization may use to avoid conflicts.Balance between the individualism and collectivism. Someorganizational cultures valued the individualism and some value thecollectivism.
But it is important have balance in between, because of complextype of work arrangements, multiculturalism and diversity in employees