International human resource management is a process that involves the procurement, allocation and efficient utilization of human resources of the multinational companies (Dowling et al., 2013). International HRM focuses on identification and understanding management of the dispersed workforce of MNCs to leverage resources and achieve a global competitive advantage. Globalization has led to increased dominance of multinational companies in the world’s market. The MNCs have acquired new forms of human resource management (HRM) to enhance internationalization for their products and services (Edwards et al., 2013). This paper briefly reviews the academic literature documented by researchers on multinational companies so as to get an in-depth understanding of the HRM practices of the Chinese MNCs in the UK. Therefore there is need to explore how cultural differences affect the multinationals and future business implications. It is from this perspective that I have selected Huawei, a Chinese MNCs to examine the HRM practices they use in the UK business environment (Miao & Christine, 2007).
As discussed in this assessment, Huawei has incorporated the UK practices in employee management to facilitate prosperity of the globalization strategies (Fang, 2011). Additionally, critical analysis and reflection of the HR functions in Huawei have provided the opportunities and challenges faced by the Chinese MNCs in the UK market and the cultural and national differences between the two regions. Hence, one can evaluate the HR contributions and propose various recommendations that may facilitate efficient coordination between china’s companies and their subsidiaries in the UK.
There is substantial research on the human resource practices applied by the Chinese multinational corporations as they operate in the UK. The research shows that these subsidiaries exhibit characteristics similar to those of the country of origin (Miao & Christine, 2007). It is argued that the HR managers of the MNCs combine various approaches to ensure they recruit staff that is a mixture of the host country, parent company and third party nationals for effective international HRM. Furthermore, they use the localization strategy in their human resource management (Fang, 2011). Researchers argue that such practice enables Chinese MNCs to respond to the inherent regulatory and cultural constraints (Fang, 2011). Despite the significance of this strategy, it is quite difficult to implement it fully since the parent companies usually influence their subsidiaries. Before 1970, Chinese MNCs operated in the domestic economy which was centrally planned (Warner, 2010). However, after the shift in the business direction, the Chinese MNCs opted to use the UK management practices especially in the personnel administration and employee relations. If a company wants to be successful in a foreign, it should comply with indigenous practices of that area. Therefore the Chinese MNCs adopted the local labor management practices to attract and retain local expertise, to learn and understand the UK markets as well as enhance the innovation and technology in the production processes (John et al., 2007).
China’s companies significantly influence the human resource practices of the subsidiaries in the UK, referred to as the country of origin effects (Andreas et al., 2014). However, the national differences between UK and China threatens the ability to transfer the management practices like, selection, assessment, reward and promotion between the companies. The academic studies of the Chinese MNCs provide evidence that the concept of absorption localization has aided in the move towards globalization (Miao & Christine, 2007). Despite, using home country practices can limit internationalization of HR practices and convergence as well. Although, it is important that the MNCs continue using some of their parent companies HRM practices especially in senior management to maintain the financial support from the government. The diffusion of HR practices from developed countries to the MNCs brings out best HRM in the organizations (Almond, 2011).
Documented research and academic studies show that cultural differences between China and UK limit the expansion of the MNCs to the UK markets (Zhao and Du, 2012). However, culture may either positively or negatively influence the operations of MNCs depending on the similarities of home and foreign countries. An example of the cultural difference is the power distance which may impact the willingness of employees to accept supervisory directions. Culture influences the mode of entry into a certain market and the performance of the MNCs (Miao & Christine, 2007). Multicultural groups can lead to a lack of cohesion hence the failure of right decision among management in the organizations. Some may believe in collectivism such as China while others like the UK believe in individualism (John et al., 2007).
The emerging trends and issues in the UK market have forced the Huawei to shape its HRM into a cost driven and competitive organization through labor flexibility, outsourcing, and downsizing (Ahrens, 2013). Apparently, there are several opportunities available to the HRM that can enhance the HR practices of the organization (Frank & Pawan, 2015). As a result, it can identify the various approaches to surmount these challenges and explore to more opportunities.
First, the increased workforce diversity by MNCs provides an opportunity for Huawei to source top talents available in the UK labor market (Gartside et al., 2014). As a result, the recruitment and selection process of Huawei HRM becomes easier. Such function is facilitated by the increased rate of skilled EU migrant workers entering the UK workforce thus increasing the demand for employment. Thus, providing experienced personnel who can come up with innovative ideas that enhance the production of computer hardware electronics at lower wage rates. Social recruiting techniques used by the HR department facilitate tapping relevant skills required in the technical job positions that are difficult to fill (Huawei website, 2015).
Secondly, adoption of the localization strategy enables the HRM of the organization to understand the various niches of the UK market. Hence, the training and development process to newly recruited employees can be fastened by mixing the local workforce with the home country workforce (Alberto, 2013). This decision facilitates an exchange of technology and innovation between the two nations to achieve success in the Huawei’s functions. The use of temporary and contract staffing can facilitate the acquisition of new ideas to the existing permanent workforce thus enhancing the career development and training (Cai, 2011).
The changing market fluctuations provide a third opportunity of optimal performance management. The UK labor market allows the HR managers to evaluate whether the hired staff focuses on the goals and objectives of the organization. Therefore, the performance appraisal reports given in the media can help in identifying how to manage the diverse workforce efficiently and identify areas that need improvement for those who meet minimal requirements of the Huawei’s employment policies.
The changing landscape of labor in the UK has enhanced employee relations by the HR managers through maintenance of a balanced and healthy relationship between the employees and the Huawei management. This function enables the company to attract a more skilled workforce from the competitors’ staff as people would prefer to work in an environment that has a high motivation of financial and non-financial benefits. The good working conditions such as employee welfare lead to the hiring of a workforce that focuses on coming up with unique and great hardware electronics (Gulsoy, 2013).
HR managers of Huawei use various methods of compensation as a way of retaining and motivating their employees. They focus mainly on this function because it leads to workforce satisfaction, low absenteeism, and turnover (Parry et al., 2011). Therefore, their unique ways of motivating the employees give them an opportunity of getting a competent workforce that can compete globally.
Since Huawei operates in a technical field, the HR practitioners need to hire skilled and experienced personnel. However, the process of recruitment and selection becomes quite challenging because of the increased rate of self-employment (Dowling et al., 2013). They face the challenge of how to ensure that hiring and retention are done effectively with the aim of reducing the company’s labor costs. Inadequate global standardization in education makes it difficult for the HR managers to assess the qualifications of workers appropriately (Parry et al., 2011).
The cultural diversity of the Huawei’s workforce forces the company to implement new strategies that can help adapt to the rapid changes that occur in the worker’s profile (Frank & Pawan, 2015). This challenge requires that the training and development programs to be future oriented to retain and overcome turnover costs. Moreover, during the training process, HR managers may face the challenge of aligning their workforce to the technology best practices internationally.
HR managers find it difficult to manage the risks associated with the global operation because of the difficulty related to coordinating a virtual employee team that they may not meet face to face. The cultural and linguistic misunderstanding can pose a problem in employee relations especially during the merger and acquisition process (Milliman et al., 2009). Migrations of people lead to uncertainties of the composition of the UK labor market due to the shifting of talents and skills from place to place. The UK regulations concerning workplace safety are quite cumbersome to comply with as they have an involving work profile (Frank & Pawan, 2015).
Huawei also face challenges of implementing global talent management. The staffing policy requires that they use the polycentric, ethnocentric and geocentric approaches to the recruitment and selection to neutralize the cultural differences among the candidates (Gulsoy, 2013). Such a step can enhance the HRM practices in all the multinational companies especially the Huawei, to ensure they have the right staff that can produce quality electronics that satisfy the needs of customers globally.
Lastly, the HR managers of the company face compensation challenges. They include, educating their local and home country employees on the right insurance packages to select, developing compensation strategies that fit all the ages and demographics and ensuring there is no bias in the benefits given to all the members (Dowling et al., 2013). Biasdness, lead to frequent conflicts within the workforce, mistrust and little cooperation in all the departments of the organization.
This research found out that the Chinese MNCs operating in the UK play a vital role in the whole process of internationalization by companies in China. The primary goal of the expansion of these enterprises to the UK market was to improve their HR practices since Britain is among the most developed countries with skilled and over-qualified personnel (Edwards et al., 2013). The localization strategy has brought a significant change to the traditional Chinese centrally planned economy that focused on command rather than the participation of all stakeholders in the decision-making process. However, it is argued that the national institutional and cultural differences constrain the localization and diffusion of the MNCs workforce. Furthermore, the rapid changes in the economy and managerial competency have significantly influenced the HR practices of these multinational companies (Tungli, & Peiperl, 2009).
The globalization impacts force the Chinese MNCs to incorporate the UK practices with the aim of occupying the global markets by effectively managing workforce diversity to increase the performance of the companies (Almond, 2011). The various opportunities available in the UK market as discussed above can be a significant tool for expanding to these markets through increased bargaining power between managers of these branches and the directors of the parent companies. However, the MNCs operating in the UK face challenges that stem from transfer and adaptation of the UK HRM practices (Parry et al., 2011).
The findings indicate that three factors tend to shape the HRM practices of the subsidiaries or branches and include; country of origin effect, local impacts, and dominance influences. The high degree of standardization and use of scientific management lead to specified job structures and the methods of evaluating performance management. The Chinese MNCs tend to put more effort in transferring home practices to the UK as a way of improving the competitiveness (Randall and Susan, 2014). The employment relations should be managed in a way that it complies with the localization and internationalization of HR functions globally. The analysis of the Huawei Company shows that the Chinese MNCs need to reexamine the future impacts of global integration and localization of their HRM practices as conflict and individual differences may arise between the management of parent company and its branches or subsidiaries. The recommendations to the Chinese MNCs board are discussed below;
Conclusion
In summary, the globalization impacts have substantially contributed to the expansion of the Chinese MNCs into the UK market. The Huawei Company is increasing its market in the UK. Therefore the HRM of this organization should analyze the opportunities and challenges they face and make appropriate changes. Diffusion of home HR practices with international practices can significantly improve its performance as there can be increased trained and experienced workforce. The board of Chinese MNCs should implement recommendations from different researchers for them to remain competitive.
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