Model Of Strategic Human Resource Management – An Analysis

Job Design and Structure

Discuss about the Model of Strategic Human Resource Management.

Over the years, the UK has prided themselves on their attractiveness as a host country for foreign direct investments. This can be attributed to their relatively low labor costs, a weakened trade union movement, permissive labor legislations and access to the European Union market. The Singapore-owned companies employ a considerable proportion of the UK workforce when they take their subsidiary firms overseas to the U.K. The HR function in the UK emphasizes on the learning and development of individuals through management and presents a belief in a higher sense of purpose for HRM than the Singapore’s profit-oriented and straightforward judgment of HRM. A transfer of human resource policies between a parent company from Singapore and its subsidiary in the UK does not entirely depend on the home and host country effect but also on the strategic role that the subsidiary plays, power relations and the methods of affiliate establishment. The home country effect dictates that international human resource management policies and the employment relations of the foreign affiliates are shaped by those of the parent country. On the other hand, the host country effect suggests that they are also influenced by the country of operation, which is the UK in this case (Ferner, 2011)

An overseas subsidiary that chooses to adopt the UK’s job design and structure would have to adopt the flat structure model of the host country. This structure has fewer management layers with wider spans of control. The span of control refers to the total number of workers under the supervision of a single person. The operational manager is positioned at the top, the service managers at the middle and the operatives at the bottom level.  As a result, the operatives can easily access and communicate quickly to the manager (Ferner, 2013). This structure relies heavily on workers taking up more responsibilities for making decisions and creating a more motivated workforce. A subsidiary that decides to stick to its home country job structure adopts the tall hierarchical structure popular in Singapore.  This job structure has several distinct categories of workers who report upwards to their respective team leaders and them in turn report to the operational managers. It has a wider chain of command but a narrow span of control. Chain of command is the number of ranks in management within a firm. Such a tall structure could be the cause of slow communication processes and decision-making inefficiency. An example of such a tall structure is one with the director at the top most position; area managers below him, the operational managers follow then the service managers and finally the operatives at the bottom (Chen and Lawler, 2014). 

An overseas subsidiary from Singapore would have to employ workforce from the U.K which has a different recruitment and selection technique than that of the home country. The majority of the organizations in the U.K recruit to maintain an adequate level of personnel, others use sales and business forecast to determine the human capital required while more than half of the firms first analyze the labor markets. Almost all of the U.K organizations conduct a forecast of the skills requirements. The staffing process incorporates the use of application forms, references, and interviews (Dowling, Welch and Schuler, 2013). The employers prefer the use of job interviews because it facilitates the communication process and acts as a valuable information function. It helps to fill gaps from other information sources such as the curriculum vitae and allows for assessing of valued characteristics such as interpersonal skills and appearance which can only be done in person. A larger subsidiary would have to use systematic methods especially for the personality and psychological tests for technical and management staff. Work samples are put in greater use for the clerical, technical and skilled staff during recruitment (Liu, 2012).

Analysis of the Staffing Process

In addition, the large organizations find a structured application form more useful to filter the many applicants for managerial posts. Such companies may use application forms as a marketing strategy that allows them to reveal a specific organization culture and image that will, in turn, captures the attention of high caliber recruitment candidates for staffing. This staffing process is not the same as in the home country whereby the local newspapers have classified sections for advertisements for jobs. According to Baldwin (2012), the print media is extensively used to staff employees at all categories from the operators, supervisors to the managers. Firms in Singapore use staffing methods such as employee referrals, employment agencies, walk-ins and rehires regardless of the job levels except for the executive search firms. Other innovative staffing methods are career fairs, campus drives, and electronic media. However, there are a few differences in the recruitment technique for some specific employees such as the reference checks frequently used to select managers, supervisors and the rank-and-file. Work samples, physical ability tests, job ability tests and performance tests are often used for the rank-and-file employees. Less popular recruitment methods in the home country are signs and bus advertisements, pamphlets, TV and radio advertisements (Ferner and Quintanilla, 2012).

In the host country, U.K provides a limited amount of training and development to its employees. Approximately 10% of their firms offer ten or more training days per year for the managers. The U.K’s practices in international HRM are relatively low in training expenditure when compared with other leading economies. Formal career planning is applied as a standard training method where managerial careers are carefully planned and the selected employees are trained to become high-ranking managers (Edwards and Ferner, 2011)

Other common methods of development are performance appraisals whereby managers are given feedback on the best ways to improve their performance. Succession plans are also put into place where the good performers are selected for preparation in order to replace the key personnel who could be leaving the organization. Training programs in the host country focus mainly on staff communication, team building, and performance appraisal and there is a lack of focus on foreign language training. On the other hand, there is an increased emphasis put on the significance of training and skill upgrading among employees of the home country.

In this case, subsidiary overseas could choose to incorporate the home country’s training and development program with that of the host country so as to realize maximum benefits. Management development programs are offered in Singapore’s three main universities (Edwards, 2013). Most of the civil servants get their training at the Civil Service College. Seminars are also readily available and conducted at the Institute for Policy Studies. Most of the employees from the home country receive on-job-training (OJT) at some point in their career life.  When compared to international HRM practices, local firms have a higher turnover rate than the multinational corporations. This reflection of an inability to retain employees by the home country firms can be attributed to the lack of effective training programs. The overseas subsidiary would have to integrate both training and development programs of both countries to ensure that it realizes maximum benefits after posting of human resource development (Ferner and Almond, 2014).

Training and Development

The compensation benefits of the U.K are greatly influenced and determined by the host country’s laws, acts and regulations which the subsidiary overseas has to adopt. There is a practice of government-mandated minimum wages with a national minimum wage that sets a lower limit for compensation from which no wage should go beyond this rate. More than half of the firms have a variable pay as a significant compensation structure. 63% of the public sector organizations offer some sort of a variable pay to their managerial employees while 23% have incorporated their clerical employees into this program. Employee-sharing programs and group bonus programs are some of the commonly used forms of variable pay. There’s also an emphasis on the employee share ownership schemes where the workers can own shares in the firm’s stock.

Also, the use of merit pay to compensate the professionals and managers where pay is linked to an employee’s performance based on merit is another growing popularity in the U.K. When it comes to compensation benefits, the host country avails health care to all employees regardless of their employment status. The U.K does not have extra compulsory vacation period beyond the usual eight bank holidays but offers a paid leave of an average of 22days in a year. Trade unions that fight for worker’s compensation rights are losing their influence in the U.K. The home country lacks the mandated minimum salary found in the host country and the wages are purely based on the mutual understanding between an employer and the workers. The Singapore Employment Act sets the basic compensation terms (Ferner, 2013). A trade union and the employers could also set their own supplemental terms and conditions that have to get ratification from the Industrial Arbitration Court (IAC). The Act protects workers with weak bargaining power against employers’ exploitation. It covers employees who are not in the managerial category in areas such as overtime pay and extra pay for holidays.

Further, employees are only entitled to retrenchment benefits after serving for three years in a firm if at all these kinds of benefits had been highlighted in the original employment contract. It also has a National Wages Council (NWC) that is comprised of government officials, trade unions and employer associations (Doz and Prahalad, 2014).The home country also has a Worker’s Compensation Act that ensures that employees receive compensation for injuries suffered at work. It also has a Central Provident Fund (CPF) as a mandatory savings scheme for all its citizens and workers can only withdraw funds from it at old age or for investments like buying a home. Singapore does not avail free health care to its citizens but they can use their CPFs to cater for some of their medical expenses (Chen and Lawler, 2014)  

Power Distance- The U.K firms are flatter whereas those of Singapore have a greater hierarchy and a tolerance for their unequal distribution of power. Singaporeans are generally more accepting of the top-down and directive management and are unlikely to change this culture. This is evident in the way the trade unions play a small role in fighting for issues such as higher compensation and wages. It is contrary to the U.K where the power distance is much lower and citizens have zero tolerance of any practices deemed as unfair.

Remuneration Package

Individualism- The host country’s business culture is based on individualism which is not the case in the Singapore’s collectivist culture. Though collectivistic cultures are characterized by welfare, Singaporeans acknowledge the significance of being industrious. It is therefore not a welfare state and does not completely provide for the unemployed to avoid giving them a free-ride at the expense of the rest of the nation. However, the government still avails welfare subsidies in other areas such as medical care (Martin and Beaumont, 2013).

Uncertainty Avoidance Index- The home country scores very low on this ranking although it would be a common assumption that a country with strict laws and regulations would view new changes and ideas negatively (Edwards, 2016). This is not the case since Singapore is not averse to change. The host country has a higher score on the index and this implies that they are more averse to taking risks and skeptical of new ideas. This risk-aversion could be attributed to the U.K’s engagement in needs assessment before implementation of any training programs. In Singapore, training is implemented on a more flexible and casual basis (https://www.clearcultural.com/geert-hofstede-cultural-dimensions).

Masculinity- both the host and home country seem to score similarly on this one. Although they both tend to lean on feminine business culture, Singapore’s culture is a bit more masculine (DiMaggio and Powell, 2012). Organizations in the home country create a more competitive working environment and the people have a higher mentality towards work than people in the U.K. They have a strong focus on profit which could be attributed to its masculine competitiveness. People in the host country tend to be more self-actualizing which is demonstrated by the U.K’s firm to implement performance appraisal, a factor that would be deemed by the Singaporeans as a waste of resources and time (Martin and Beaumont, 2013),

Long-term Orientation- the U.K’s business culture is more short-term oriented than that of Singapore and this is evident in their training and development program that omits training of foreign languages. This is contrary to the home country’s long-term orientation where leaders constantly call upon the Singaporeans to upgrade their skills as they prepare themselves for future changes (Baldwin and Magjuka, 2012).

Conclusion

The profile of the international HRM for an overseas subsidiary is shaped by the integration of the home and host country’s industrial and organizational effects. Some international HRM practices may be replaced or altered but others may fit in into the host country’s policies. There are no clear distinct HRM strategies for overseas subsidiaries and most of them are more likely to use a hybrid strategy whereby they integrate an adaptive strategy and an exporting one. This is because some international HRM practices could be more sensitive to the pressures of local adaptation than others.

References

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