Impact of Effective Human Resource Management in International Companies

   Abstract
Human resource management affects every aspect of the workforce: management/ labor, employer/employee, student/professional. This thesis provides coverage of all the expected HRM critical topics such as analyzing jobs; planning; recruiting, selecting, training, developing, and compensating employees; managing performance; and handling labor relations. In addition, I tried to define ways to achieve extraordinary results in international organizations. The additional expectations of the proactive human resource professional and leader, such as managing human resources globally, adopting a total rewards approach to compensating and rewarding employees, and creating a high-performance work environment where employees hearts and minds are engaged.

Table of Contents……………………………………………5

Table of Figures……………………………………………..8

  1. Introduction………………………………………………..10
  2. Strategies, Trends, and Challenges in Human Resource Management……….12
    1.     The Value of People……………………………………………12
    2.     Responsibilities of Human Resource Departments………………………15

Analysing and Designing Jobs………………………………….17

Recruiting and Hiring Employees………………………………..17

Training and Developing Employees……………………………..18

Managing Performance……………………………………….19

Compensation and Rewards……………………………………19

Maintaining Positive Employee and Labour Relations………………….20

Establishing and Administering Human Resource Policies………………20

Ensuring Compliance with Legislation…………………………….20

  1.     Focus on Strategy……………………………………………..21

Productivity Improvement……………………………………..22

Expanding into Global Markets………………………………….22

  1.     The Global Workforce………………………………………….23

International Assignments……………………………………..24

Outsourcing……………………………………………….24

Mergers and Acquisitions……………………………………..25

  1.     Required Professional Capabilities (RPCs) and Certification of HR

Professionals………………………………………………26

  1.     Ethics in Human Resource Management……………………………..27

Code of Ethics……………………………………………..28

  1.     HR Responsibilities of Supervisors and Line Managers…………………..29
  2.     Careers in Human Resource Management…………………………….30
  3.     Change in the Labour Force………………………………………32
  4. Change in the Employment Relationship……………………………..35

A New Psychological Contract………………………………….35

Flexibility………………………………………………..36

HUMAN   RESOURCE   MANAGEMENT   IN INTERNATIONAL        COMPANIES                37

  1. Preparing for and Acquiring Human Resources………………………39

Work Flow in Organizations……………………………………39

Work Flow Analysis…………………………………………39

Work Flow Design and Organization’s Structure……………………..41

  1.     Job Analysis…………………………………………………42

Job Descriptions……………………………………………43

Writing a Job Description……………………………………..43

Job Specifications…………………………………………..46

Fleishman Job Analysis System…………………………………47

Written Comprehension……………………………………….48

Importance of Job Analysis…………………………………….49

  1.     Job Design………………………………………………….50

Designing Efficient Jobs………………………………………50

Designing Jobs That Motivate…………………………………..51

Self-Managing Work Teams……………………………………53

Flexible Work Schedules………………………………………54

  1. Managing Talent……………………………………………..56
    1.     Training and Development Linked to Organizational Needs and Strategy………58
    2.     Needs Assessment and Assessing Readiness for Training………………….60

Organization Analysis………………………………………..61

Person Analysis…………………………………………….62

Task Analysis……………………………………………..63

In-House or Contracted Out?……………………………………63

  1.     Choice of Training Methods……………………………………..64

Classroom Instruction………………………………………..66

Audio-visual Training………………………………………..66

Computer-Based Training……………………………………..66

Electronic Performance Support Systems…………………………..67

E-Learning………………………………………………..67

  1.     Implementing and Evaluating the Training Program……………………..68

Principles of Learning………………………………………..68

  1.     Measuring Results of Training…………………………………….71

Evaluation Methods………………………………………….72

  1.     Approaches to Employee Development……………………………..73

Development for Careers………………………………………74

Formal Education…………………………………………..75

Assessment……………………………………………….76

  1.     360-Degree Feedback…………………………………………77
  1. Managing Human Resources Globally……………………………..79

International Workforce………………………………………80

Employers in the Global Marketplace……………………………..81

  1.     Factors Affecting HRM in International Markets………………………84

Culture…………………………………………………..85

Education and Skill Levels…………………………………….90

Economic System…………………………………………..90

Political-Legal System………………………………………..91

  1.     Workforce Planning in a Global Economy…………………………..92
  2.     Selecting Employees in a Global Labour Market………………………93
  3.     Training and Developing a Global Workforce…………………………95

Training Programs for an International Workforce…………………….96

  1.     Cross-Cultural Preparation………………………………………98
  2.     Performance Management across National Boundaries……………………99
  3.     Compensating and Rewarding an International Workforce………………..100

Pay Structure……………………………………………..100

Employee Benefits………………………………………….102

  1.     Preparing Expatriates…………………………………………103
  1. Conclusion…………………………………………………108

Bibliography………………………………………………..111

Table of Figures

FIGURE 1 : HUMAN  RESOURCE MANAGEMENT PRACTICES……………………………..11

FIGURE 2 : IMPACT OF HUMAN  RESOURCE MANAGEMENT……………………………..13

FIGURE 3 : AVERAGE LABEL PRODUCTIVITY GROWTH  (%)………………………………23

FIGURE 4 : REQUIRED PROFESSIONAL CAPABILITIES BY FUNCTIONAL DIMENSIONS…………………..26

FIGURE 5 : STANDARDS FOR IDENTIFYING  ETHICAL PRACTICES…………………………….27

FIGURE 6 : TYPICAL AREAS OF  INVOLVEMENTS……………………………………30

FIGURE 7 : SALARIES FOR HRM POSITIONS……………………………………..31

FIGURE 8 : AVERAGE HOURLY EARNINGS IN HR……………………………………31

FIGURE 9 : DECLINE OF LABOUR FORCE……………………………………….33

FIGURE 10 : AGE DISTRIBUTION PROJECTION OF THE EUROPEAN  POPULATION……………………33

FIGURE 11 : HRM PRACTICES  THAT SUPPORT DIVERSITY  MANAGEMENT………………………34

FIGURE 12 : DEPLOYING A WORK-UNIT ACTIVITY ANALYSIS……………………………..40

FIGURE 13 : EXAMPLE OF ABILITY FROM  THE FLEISHMAN JOB ANALYSIS SYSTEM…………………..48

FIGURE 14 : APPROACHES TO JOB DESIGN………………………………………51

FIGURE 15 : CHARACTERISTICS OF  A MOTIVATING JOB………………………………..53

FIGURE 16 : ALTERNATIVE TO 8-TO-5 JOB………………………………………55

FIGURE 17 : STAGES OF  INSTRUCTIONAL  DESIGN…………………………………..59

FIGURE 18 : NEEDS ASSESSMENT…………………………………………..60

FIGURE 19 : OVERVIEW OF USE OF INSTRUCTIONAL   METHODS……………………………65

FIGURE 20 : MEASURES  OF  TRAINING EVALUATION…………………………………72

FIGURE 21 : THE FOUR APPROACHES  TO EMPLOYEE  DEVELOPMENT…………………………75

FIGURE 22 : STEPS IN THE TELUS DEVELOPMENT  SYSTEM……………………………..78

FIGURE 23 : LEVELS OF GLOBAL  PARTICIPATION…………………………………..83

FIGURE 24 : FACTORS  AFFECTING  HUMAN  RESOURCE MANAGEMENT IN INTERNATIONAL  MARKETS…………85

FIGURE 25 : FIVE DIMENSIONS OF  CULTURE…………………………………….87

FIGURE 26 : EMOTIONAL CYCLE ASSOCIATED WITH A FOREIGN   ASSIGNMENT…………………….95

FIGURE 27 :  EARNINGS IN  SELECTED OCCUPATIONS IN SEVEN CITIES………………………..100

FIGURE 28 : NORMAL ANNUAL HOURS WORKED IN MANUFACTURING……………………….103

FIGURE 29 : THE BALANCE SHEET FOR DETERMINING  EXPATRIATE  COMPENSATION…………………105

FIGURE 30 : CUSTOMER-ORIENTED PERSPECTIVE OF  HRM…………………………….108

1.  Introduction

What do PricewaterhouseCoopers, Research in Motion and Google Inc. have in common? They have all been recently recognized as excellent employers with progressive human resource management practices. The list of employment awards is growing, raising the bar on what it takes to attract, retain, and engage top talent. As labor markets become increasingly competitive, human resource professionals are being called upon to provide people management practices that not only support the organization’s priorities but also provide for competitive success in a global marketplace. Organizations also strive to create an employment brand that resonates with specific employees.

Perhaps no organization has received more attention or has a stronger brand than Google. Google is known for its people practices and employee-first culture that directly contribute to its success. The work environment provides “Googlers” unlimited amounts of free, chef-prepared food at all times of the day, lap pools, onsite massages, car washes, oil changes, dry-cleaning, laundry service, and haircuts. Google’s “20-percent time” gives employees 20 present of their day to “work on what they’re really passionate about”—and tangible organizational outcomes often result. For example, Gmail came about from one Google employee’s 20-percent time efforts. Perhaps it is no surprise that Google receives 1300 resumes every day and is able to attract and retain some of the world’s top talent.1 Organizations of all sizes and in all industries are increasingly recognizing the importance of people. This is a time of rapid change in the market—a time when Canadian organizations are constantly trying to keep pace and remain competitive. In today’s knowledge-based economy, I rely on people to generate, develop, and implement ideas and the human resource function has an important role in ensuring that organizations have the people capacity to execute strategic objectives.”2

1 Cowan, Janice Cooney and Allison. 2009. Canadian Organizations Continue to Under-Invest. Conference Board of Canada. [Online] 2009. www.conferenceboard.ca/ documents.asp?rnext=548.. 2 Wright, Ruth. 2008. The Strategic Value of People: Human Resource Trends and Metrics. Ottawa : Conference Board of Canada, 2008.. p 33

Figure 1 : Human Resource ManagementPractices

Human resource management (HRM) centres on the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. Many companies refer to HRM as “people practices.” Figure 1 emphasizes that there are several important HRM practices that contribute to an organization’s ability to realize the full benefit of its talent: analysing work and designing jobs, attracting potential employees, choosing employees, preparing employees to perform their jobs and for the future (training and development), supporting their performance (performance management), rewarding employees (compensation), creating a positive work environment (employee and labor relations), and supporting the organization’s strategy. In addition, HRM has responsibility for providing safe work environments and assuring compliance with legal requirements. An organization performs best when all of these practices are managed systematically. At companies with effective HRM, employees and customers tend to be more satisfied, and the companies tend to be more innovative, have greater productivity, and develop a more favourable reputation in the community.3

3 M. A. Hitt, B. W. Keats, and S. M. DeMariei. 2006. Evaluating Human Resource Effectiveness . Human Resource Management. Washington, DC : BNA Books, 2006., p 152

2.  Strategies, Trends, and Challenges in Human Resource Management

 

Managers and economists traditionally have seen human resource management as a necessary expense, rather than as a source of value to their organizations. Economic value is usually associated with capital, equipment, technology, and facilities. However, in the changing corporate environment, more and more organizations are awakening to the importance of human capital as the next competitive advantage.4

2.1.    The Value of People

 

 

A barrier to business expansion is not only availability of financial capital but also access to talent that is, human capital. In summary, people are crucial to organizational success and the human and intellectual capital of an organization’s workforce provides an opportunity for substantial competitive advantage. As the ‘resident people experts,’ HR leaders are ideally suited to advise their organization on the best means for realizing their objectives. Decisions such as whom to hire, what to pay, what training to offer, and how to evaluate employee performance directly affect employees’ motivation, engagement, and ability to provide goods and services that customers value. Companies that attempt to increase their competitiveness by investing in new technology and promoting quality throughout the organization also invest in state-of-the-art staffing, training, and compensation practices. These types of practices indicate that employees are viewed as valuable investments.5

4 Parker, Owen. 2006. Strategic HR Transformation Study Tour Report 2006. Ottawa : Conference Board of Canada, 2006, 2006., p 10

5 Greer, Charles. 2001. , Strategic Hwnan Resource Management, 2nd ed. . New Jersey : Prentice- Hall, 2001., p 520

The concept of “human resource management” implies that employees are re- sources of the employer. As a type of resource, human capital means the organization’s employees, described in terms of their training, experience, judgment, intelligence, relationships, and insight the employee characteristics that can add economic value to the organization. In other words, whether it manufactures bicycles or forecasts the weather, for an organization to succeed at what it does, it needs employees with certain qualities, such as particular kinds of skills and experience. This view means employees in today’s organizations are not interchangeable, easily replaced parts of a system but the source of the company’s success or failure. By influencing who works for the organization and how those people work, human resource management therefore contributes to such basic measures of an organization’s success as quality, profitability, and customer satisfaction. Figure 2 shows this relationship.

Figure 2 : Impact of Human ResourceManagement

 

 

Human resource management is critical to the success of organizations, because human capital has certain dualities that make it valuable. In terms of business strategy, an organization can succeed if it has a sustainable competitive advantage (is better than competitors at something, and can hold that advantage over a sustained period  of  time). Therefore, I can conclude that organizations  need the

kind of resources that will give them such an advantage. Human Resources have these necessary qualities:

  • Human resources are valuable. High-quality employees provide a needed service as they perform many critical functions.
  • Human resources are rare in the sense that a person with high levels of the needed skills and knowledge is not common. An organization might spend months looking for a talented and experienced manager or technician.
  • Human resources cannot be imitated. To imitate human resources at a high- performing competitor, you would have to figure out which employees are providing the advantage and how. Then you would have to recruit people who can do precisely the same thing and set up the systems that enable those people to imitate your competitor.
  • Human resources have no good substitutes. When people are well trained and highly motivated, they learn, develop their abilities, and care about customers. It is difficult to imagine another resource that can match committed and talented employees.

These qualities imply that human resources have enormous potential. An organization realizes this potential through its approach to human capital management, that is, how it practises human resource management.

Effective management of human resources can form the foundation of a high- performance work system and organization in which technology, organizational structure, people, and processes all work together to give an organization an advantage in the competitive environment. As technology changes how organizations manufacture, transport, communicate, and keep track of information, human resource management must ensure that the organization has the right kinds of people to meet the new challenges. Maintaining a high- performance work system might include development of training programs, recruitment of people with new skill sets, and establishment of rewards for such behaviors as teamwork, flexibility, and learning.

2.2.                                                                                                    Responsibilities of Human Resource   Departments

 

In all but the smallest organizations, a human resource department is responsible for the functions of human resource management. On average, an organization has one HR staff person for every 100 employees served by the department; however, this ratio may vary widely across organizations. Another general guideline is that a specialized HR role is often created when an organization has reached the size of approximately 40 employees. Table 1 details the responsibilities of human resource departments. These responsibilities include the practices introduced in Figure 1 plus two areas of responsibility that support those practices: (1) establishing and administering human resource policies and (2) ensuring compliance with legal requirements.

Although the human resource department has responsibility for these areas, many of the requirements are performed by supervisors or others inside or outside the organization. No two human resource departments have precisely the same roles, because of differences in organization sizes and characteristics of the workforce, the industry, and management’s values. In some companies, the HR department handles all the activities listed in Table 1. In others, it may share the roles and duties with managers and supervisors of other departments such as finance, operations, or information technology. When managers and supervisors actively perform a variety of HR activities, the HR department usually retains responsibility for consistency and compliance with all legal requirements. In some companies, the HR department actively advises top management. In others, the department responds to top-level management decisions and implements staffing, training, and compensation activities in light of company strategy and policies.

Analysis and design of work Work analysis; job design; job descriptions
Recruitment and selection Identify needs; recruiting; interviewing and screening; deployment of staff; and outplacement
Training and development Orientation; learning strategies; design, deliver, and evaluate programs; career development
Performance management Integrate performance measures; performance appraisal systems; assist and coach supervisors
Compensation and rewards Develop and administer compensation and incentive programs; benefit program design and implementation; pension plans; payroll
Employee and labour relations Employee and labor relations; Terms and conditions of employment, communication; employee involvement; labor relations
Strategy Strategic partner in organizational effectiveness; change and development; workforce planning
Human resource policies Guide and implement policy; create and manage systems to collect and safeguard HR information
Compliance with legislation Implement policies to ensure compliance with all legal requirements; reporting requirements

Table 1 : Responsibilities of HRDepartment6

 

 

 

 

 

 

 

 

6  Canadian Council of Human Resource. Canadian Council of Human Resources Associations National Standards for Human Resources Professionals. [Online] 2004. [Dátum: 22. February 2012.] www.cchra-caarh.ca/en/phaseireport. 2004.

Let’s take a look at an overview of the HR functions and some of the options available for carrying them out. Human resource management involves both the selection of which options to use and the activities related to implementation.

Analyzing and Designing Jobs

To produce their given product or service (or set of products or services), companies require that a number of tasks be performed. The tasks are grouped in various combinations to form jobs. Ideally, the tasks should be grouped in ways that help the organization to operate efficiently and to obtain people with the right qualifications to do the jobs well. This function involves the activities of job analysis and job design. Job analysis is the process of getting detailed information about jobs. Job design is the process of defining the way work will be performed and the tasks that a given job requires.

Recruiting and Hiring Employees

On the basis of job analysis and job design, an organization can determine the kinds of employees it needs. With this knowledge, it carries out the function of recruiting and hiring employees. Recruitment is the process through which the organization seeks applicants for potential employment. Selection refers to the process by which the organization attempts to identify applicants with the necessary knowledge, skills, abilities, and other characteristics that will help the organization achieve its goals. An organization makes selection decisions in order to add employees to its workforce, as well as to transfer existing employees to new positions.

At some organizations, the selection process may focus on specific skills, such as experience with a particular programming language or type of equipment. At others, selection may focus on general abilities, such as the ability to work as part of a team or find creative solutions. The focus an organization favors will affect many choices, from the way the organization measures ability, to the questions it asks in interviews, to the places it recruits. Table 2 lists employability skills, attitudes, and behaviors needed to participate and progress in today’s dynamic

world of work. HR professionals also provide guidance related to redeploying employees, termination, and outplacement.

Communicate Demonstrate positive
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