Challenges faced by Human Resource Managers in the Era of Gloablization
“The real wealth of a nation is its people. And the purpose of development is to create an enabling environment for people to enjoy long, healthy and creative lives. This simple but powerful truth is too often forgotten in the pursuit of material and financial wealth.”
Globalization of Indian economy is compelling organization to rethink their future strategies. It is now widely recognized that transformation is a pre-requisite to their survival and growth. Business organization in India especially public enterprises are experiencing winds of change. For the HR function, there would not be a more existing and challenging opportunity than managing the complexities of change and transformation. HR today is playing a lead role along with business functions in creating the necessary momentum and internal capabilities.
Now first let us understand what we mean by globalization.
WHAT IS GLOBALIZATION?
Every day we hear it on news, we read it in the newspapers, we overhear people talking about it… and in every single moment the word ‘globalization’ seems to have a different meaning. So what is globalization?
“…integration of business activities across geographical and organizational boundaries.”
“The capacity to treat the world as one market while…dealing with many culturally diverse merchants.”
“…the process by which markets expands to include competitors for customers and productive inputs without regard to national boundaries”.
“…doing business with a world wide focus… rather than doing business in an international market with the focus from a home-country viewpoint.”
Globalization is not just a recent phenomenon. Some analysts have argued that the world economy was just a globalized 100 years ago as it is today. Yet the term is used since the 1980’s, reflecting technological advances that have made it easier and quicker to complete international transactions, both trade and financial flows. The most striking aspect of this has been the integration of financial markets made possible by modern electronic communication.
At a political and economic level, globalization is the process of denationalization of markets, politics and legal systems i.e. the use of the so-called global economy. Globalization refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity (village markets, urban industries, or financial centers). It means that world trade and financial markets are becoming more integrated.
At a business level, we talk of globalization when organization decides to take part in the emerging global economy and establish themselves in foreign markets. First they will adapt their products or services to the customer’s linguistic and cultural requirements. Then, they might take advantage of the internet revolution and establish a virtual presence on the international market place with a multilingual corporate website or even as an e-business.
Overall, globalization requires a combination of linguistic, engineering and marketing knowledge that is not easily available. (Sparrow, Paul, R, 2006)
Globalization is linked to four major aspects:
Trade Capital movements Movement of people Spread of knowledge
DRIVERS OF GLOBALIZATION
Driving factors of globalization can be divided into four groups:
Convergence of per capita income Convergence of life styles Organizations behavior as global customers
Push for economics of scale Advances in transportation Emergence of newly industrialized countries with productive capability and low labor costs
Growth of global networks making countries interdependent Rise of new competitors intent on becoming global competitors Increased formation of global strategies alliances
Reduction on tariffs and other trade barriers Privatization of industry in many parts of the world Creation of trading blocks (i.e. EU)
Globalization has elevated the importance of HRM development in organization. These changes have led to the notion of the HR system as a strategic asset. Many of the arguments about processes of globalization within the HR function rest on the assumption that there has and continues to be longitudinal change in the conduct of HR. in the intervening seven years a wide range of contextual changes have led to significant globalization of activity, including: the transfer of work abroad, either to outsourced providers or on a global in-sourcing basis; the e-enablement of many HR process; greater sophistication in the HR information technology, new structures for international HR functions; greater competition for talented staff at all levels of organization; more protracted and strategic talent pipelines. In particular, there has been a very strong marketing, corporate communication and IT influence on the HR function. The HR function is realigning itself in response to this process of cross-function globalization (building new alliances with these functions) creating new activity streams and new roles and skills required of the HR function (Sparrow, Brewster and Harris, 2004).
HUMAN RESOURCE MANAGERS: THEIR ROLE IN A CHANGING ENVIRONMENT
Issues facing HR are expected to change dramatically in the next decades. Thus, HR professionals must play special roles in dealing with these changes and must develop specific competencies to support these roles.
Workplace flexibility is expected to be on the rise as the future workplace, the ‘virtual office’ is characterized by creative and flexible work arrangements. As more employees work off-site-up to two thirds of an organization in the 21st century – there will be an increase in emphasis on performance and results as opposed to the number of hours worked. In addition, off-site employees can expect to attend fewer meetings. Specified work will become much more collaborative and management will spend nearly all its time managing cross-functional work teams who enjoy a lot of autonomy. In essence, there will be a movement, a trend towards a decentralized model of HR.
HR managers will have to accommodate employees in their virtual work locations and find ways to manage corporate culture, socialization and employee orientation. In order to obtain and maintain a competent workforce, they must act as organizational performance experts and shape employees behavior without face to face meetings.
Another expected change in HR is the ‘Global Business’ concept world trade knew a major growth during the last years and there is forecasted as well the growth of international businesses, especially among small firms. Organization rely more and more organization HR specialists as the facilitators of work across borders and among different cultures. Therefore, they must be knowledgeable of other cultures, languages and business practices. They will be required to develop and manage an international workforce, maintain written and unwritten corporate polices for transportability to other cultures, keep top management informed of the costs of not paying attention to the transnational issues and provide their services to a variety of locations world wide.
Concerning the recruitment in the above mentioned ‘global business’ it will be important which strategy will be adopted by the management.
Globalization will impact HR managers by requiring new skills such as language capabilities. For e.g., in order to recruit employees from other cultures, HR managers will either have to learn new languages or else they will certainly have to have foreign speakers on staff. But in order to facilitate communication among people coming from a wide range of language backgrounds, in most multinationals, it is preferred to speak English.
However, when we talk about Globalization and culture, then how does this relation influence businesses and HR professionals’ attitudes?
Organization must take into account cultural differences that shape managerial attitudes, when developing multinational management programs. For e.g., British managers value individual achievement and autonomy, whereas French managers appreciate competent supervision, fringe benefits, security and comfortable conditions, while Indian managers gives more importance of their culture and tradition.
HR managers must therefore be familiar with and understand other cultural norms to promote organization diversity. An organization that recognizes and promotes cultural diversity will benefit because it will be employing the market that it serves. With increasing globalization and competition within the market, a diverse workforce is conducive to attracting and retaining a strong client base. While competing in an international market, employees from diverse national backgrounds provide language skills and understanding of other cultures. HR professionals will also be responsible for providing cultural sensitivity training for the organizations employees and for managers throughout the entire organization. (Czebter, Anamaria, 2002)
DILEMMAS FACED BY AN HR HEAD
Unlike the other industries where HR is considered as a functional need, there is a need to view HR as a partner or a business enabler. One of the constant challenges faced in this area is to align HR to business. The five R’s therefore, assume utmost significance in HR strategy. The HR team needs to get in right from the stage of defining the business strategy to Resourcing, Recruiting the right talent, Retaining the talent, Retraining and Restructuring.
However, if we see the scenario of HR in IT company, we find that flexibility appears to be the key for success and survival as IT has become such a dynamic field due to the constant developments and upgradation in the area of technology and changing customer requirements. Topping all these reasons is also the trend of globalization, which tries the HR test of endurance. The ability and the willingness to modify job structure, job classification and the organizational structure as often and as quickly as necessary are important elements in a successful recruitment and retention strategy for IT professionals. This challenges of managing expectations and change puts constant pressure on the professionals.
The challenge does not stop with recruiting the right person but with how we are going to manage the performance of our employees. The challenge would be to create a performance culture where in opportunities are provided for enhanced performance and where giving out optimum performance becomes a way of life.
Training and development is another area. In the IT industry training takes on a new connotation. It is not just about identifying training needs and giving the required training. It is foreseeing and anticipating the requirements and developing suitable training so that the employees are well-equipped to handle the challenges.
Another major challenge is how we are able to incorporate all the sub-systems in HR and help them in achieving the ultimate goal – exceptional performance. People have to be groomed to get in tune with the performance culture. Creating an environment that stimulates the creation of knowledge and its sustenance throughout the organization is big challenge. No longer can the HR department carry on with its traditional functions. However, Human Resource Information Systems (HRIS) is to be put in place – to build and sustain a performance – driven culture. The role will shift to that of facilitator. HR will have to involve the whole organization in this process and act as a counselor and facilitator and that is the most gigantic challenge the HR of any organization faces.
In the face of such challenges faced by HR managers, a question arises as to what competencies an HR manager needs to equip them in order to survive in the turbulent phase of globalization.
COMPETENCIES FOR A HR MANAGER
In order to effectively deal with all the changes, HR professionals must develop competencies that will allow them to carry out their roles, competences like:
Flexibility Team work Communication Decisiveness Leadership Strategic planning Network building Client service orientation Organizational awareness Self confidence Sharing of expertise Global and cultural understanding Multiple language competencies
In addition to increasing and sustaining technological skills relating to communication developments, HR professionals will may also be required to increase their numerical and data compilations skills. As increasing demands merge to provide specific measurable results that prove effectiveness in their area, HR professionals will be required that produce quantifiable results that prove that their department is delivering specified outcomes based on the objectives and goals set forth by the organization.
In addition to delivering specific measurable developments, managers will also need to know what contributed to the results declared. This may mean that HR professionals will be required to be familiar with and administer employee survey and provide for accurate data compilation and regression analysis.
As a result of the increase in technology, innovation and globalization over the last 20 years, HR professionals around the world are forced to be more efficient, more effective and more competitive. They need to respond to the demands of global competitiveness by becoming more familiar with language skills, cultural awareness and diversity promotion. Additionally, HR professionals must be committed to continuous learning, being familiar with cutting edge communication. If HR managers won’t pay enough attention to their changing role, serous consequences could result, including the deterioration or even perhaps the elimination of the HR department. (Halcrow A, 1998)
TO SUM UP
However, the research has shown that the HR function in international organization has to meet a series of challenges. Three key conclusions about the role of HR professionals working in the field of international recruitment selection and assessment can be drawn:
The added value of the HR function in an international firm lies in its ability to manage the delicate, balance between globally coordinated systems and sensitivity to local needs, including cultural differences, in a way that align with both business needs and senior management philosophy. There now appear to be a distinction to be made between international HRM and global HRM. In this transition, the old functional divides between international recruitment, international management development and international reward management have become increasingly weak.
Over the last 20 years, the workplace has changed in more ways that one could have ever imagined, resulting from the increase in technology, innovation and globalization. The next decade will bring even greater change, impacting all facets of the workplace, including major changes for the HR department and HR managers. In order to respond to the demands of globalization, HR managers will require new skills and competencies relating to language and culture, technology capabilities to facilitate overseas communication, methods to measure and quantify effectiveness and evaluate strategies and return on investment. Evidently, these new skills and competencies will result in an emerging new role for HR managers, requiring them to be strategic business partner, supportive of the overall corporate strategy.
The future role of HR professional will change from a less administrative role to more of a strategic role. HR managers will continually be required to prove their effectiveness and their existence. They will be expected to understand international business practices and promote cultural diversity within the organization. They will need to understand the core business of the organization and become partners with line managers. They will need to prove that their initiatives and programs are result-oriented, providing specific measurable results in terms of business competitiveness that contribute positively to the bottom-line of the organization. They will be required to stay current with leading edge as more and more organization is faced with the demands of globalization and strategic alliances with other organization around the world.
Czebter, Anamaria, (2002), ‘Labor market and Gloablization: Human Resources management in global enterprises, Centre International de Formation Europeenne, Nice. Halcrow A, (1998), ‘Survey shows HR in Transition workforce’. Sparrow, Paul, R., (2006) ‘Globalization of HR at function level: Exploring the issues through International Recruitment, Selection and Assessment Process, working papers, Cornell University. Sparrow, Paul, R., Brewster, C., and Harris, H. (2004), ‘Globalizing Human Resource Management’, London, Routledge.