HR

HR

HR

The function of HRM is viewed as a basic component of the company's overall corporate or business strategy. Therefore, HRM constitutes a major constraint when multinational companies (MNC's) try to implement global strategies. This is mainly because of the complexities of operating in different countries involved, as well as due to the employment of people with diverse national backgrounds. Therefore, the complexities of operating in different countries and employing diverse people are a key variable that can differentiate international and domestic HRM, rather than any other major differences between them. Dowling (1999) defines some variables (see figure 1) that moderate differences between domestic HRM and IHRM, which include cultural environment, the industry with which the multi-national organisation is primarily involved, the extent of reliance of the multinational on its home country or domestic market, and the attitudes of senior management.

Fig. Variables that moderate differences between domestic HRM and IHRM

Culture shock can lead to negative feelings about the host country and its people and a longing to return home. There will be culture differences in language, food, or amenity. These differences may be enjoyed for a short period of time but it may become difficult and the person may experience culture shock. People from different backgrounds have different attitudes, behaviours, and beliefs (such as “my way is the best”) which often cause international business failure. HR activities such as hiring, firing and rewarding will be determined by the policies and practices of the host country and also need to be based on their culture (Tung, 1993). Working in a new cultural environment can have problems for both expatriate and local employees.

This is one of the important variables to moderate differences between domestic HRM and IHRM. It is likely that if senior management does not have a powerful international orientation, the importance of international operations may be underemphasised or even ignored in terms of corporate goals and objectives (Barlett and Ghoshal, 1992). In this situation, HR managers tend to focus on their domestic issues and minimise those differences between domestic and international environment. They may assume that HRM practices can be transferred from domestic to international basis. This failure to recognise differences in managing HR in a foreign environment can result in major complexities in international operations. Failure may be because of ethnocentrism or lack of international perspectives. Therefore, the challenge for the HR manager is to think globally and to implement HR policies and practices that can facilitate the development of globally orientated staff.

Dessler et al (2004) are of the opinion that IHR management involves very direct contact with the values, attitudes and beliefs of the organisation's overseas workers and must therefore be ultra sensitive. It is further important to share the employee's cultural background and to be sensitive to the needs and expectations in the workplace, to manage such an organisation successfully. Crafts argues that “globalisation can be thought of as a process of integration of goods and capital markets across the world in which barriers to international ...