Best Practices In HRM In Multinational Enterprises

Introduction to Internationalization and Globalisation of Economy

Question:

Does Hr Really Work In Multinational Enterprises?

Internationalization and globalisation have become the ruling phenomena in the modern world. A globalised economy has been created where companies from a different region seem to be same region-states. Most importantly, in the shared global economy, a Multinational Enterprise seems to adopt the same strategy and best practices, leading to homogenization.  HRM practices are also not different from other strategic and management best practices. MNEs like Google, Microsoft, Facebook, Unilever, P&G and many others are taking international HRM practices for the parent company as well as for the subsidiaries. While coordination of HRM practices in parent and subsidiaries is pressurised, it is found out that most MNEs are able to operate successfully based on their national level strategies (Cox, 2014). This is possible by maintaining and being responsive towards cultural and emotional aspects of the local, regional as well as national level.

The current easy, therefore, focuses on identifying the possibility of integrating the same best practice of HRM in almost all business units including subsidiaries, franchisees and the parent company. In order to do so, the essay analyses best practice in staffing and performance management in MNEs like Google and Unilever while linking HRM theories to these best practices. After analysing the best practices, the challenges facing the MNEs in integrating HRM practices are analysed and the conclusion is drawn on the possibility of HRM working in MNEs.

Employee Staffing:

Staffing is the process of employee recruitment, screening, and selection in a business organization to fulfil the aims of the business organization. Staffing contributes to the growth and the development of financial performance by enhancing the labour productivity of the firm. Staffing help to select the best employees for the organization thereby create a competitive advantage of the firm. Moreover, staffing and effective training process in the organization aids in buffering the harmful impact of economic recession and recover more quickly. Staffing creates an impact on the acquisition of generic human capital resources (Kim & Ployhart, 2014).    

Guest model of HRM would help in better understanding of employee staffing. David Guest developed the HRM model that has six dimensions of analysis.

This model is based on the assumption that HRM and personnel management are the two distinct things. HRM helps in increasing the commitment among the employees that have a direct relationship with the valued business consequences. According to this model. The relationship between commitment and high performance is quite difficult to establish but the ‘flow approach’ within the model can result in a variety of outcomes (Wright, et al., 2015). This model is focused on employee behaviour and commitment, which are considered to be essential in strategic management. This model seems to uphold the meaning of employee staffing as appropriate HRM strategy create performance, behavioural and financial outcome.   

Best Practices in Staffing and Performance Management in MNEs

Google’s process of recruiting employees focuses on finding employees who are able to bring new perspective and life experiences within the organization. The recruitment and the training facilities of the organization have ranked Google as the ‘best company to work for’ in 2012. The company has experienced and well-paid recruiter who is responsible for selecting the best employees for the organization. Google has an online portal where interested candidates can apply. The online applications are screened and then the selected candidates are called for the interview. After the interview is done, independent hiring committee at different levels of the organization reviews the performance of the candidate and work samples and after this, the hiring decisions are undertaken. The hiring committees ensure that the recruitment and selection of the employees are done as per the established standards within the organization (Careers.google.com, 2017).   

In Unilever, the HRM put stress on developing a great culture for creating sustainability within the organization. The HR department employs innovative and people centric approaches that help in attracting, developing and retaining the best talents within the organization. Presently, there are 169,000 employees working in Unilever globally. The selected candidates have to pass through different stages of screening to be selected within the organization. The employees are motivated as the HRM provides the employees with the freedom to undertake innovative approaches.  Unilever provides messages in their recruitment advertisement that motivate the candidates to join the company. Unilever mainly relies on LinkedIn to attract the best talent to the organization. The candidates have to go through different screening to be finally selected within the organization (Unilever.com, 2017).  

Performance management of any organisation refers to a method that is important for both the employees as well as managers for creating a planning, reviewing as well as monitoring the work object as well as the overall contribution of the employees in the workplace. Performance management plays an important role in any organisation by creating an improvement in the performance of the organisation. Along with that, it also assists the organisation to retain their staff and make them loyal so that it can help them to create a productive organisation (Van Dooren et al., 2015). Performance management is helpful for managers by saving their time as well as reducing the conflicts among the employees. An effective performance management is also helpful for employees by clarifying their job responsibility as well as clearly defining the career path of the employees. Performance management is mainly combining different types of factors such as developing an effective performance management related goals that must be well defined in nature. After that, it is mandatory to monitor the progress of employees so that managers can observe whether the target goal is achieved by employees or not. Next, it is mandatory to develop an effective appraisal process so that the performances of the employees can be effectively observed and according to their performance, an effective compensation can be provided (Seuring & Gold, 2013).

Challenges Facing MNEs in Integrating HRM Practices

For the implementation of the successful performance management, Harvard school has developed a framework that mainly describes that the problem regarding the management of some historical personnel can be resolved if the manager of the organisation can state the way by which they want to involve employees in the organisational work. It is also imperative to state the practices along with the policies that can help in achieving the goals. Harvard school provides two different characteristic features such as responsibility must be accepted by the managers in order to ensure alignment of personal policies. The other characteristic is different personnel that are involved in personnel management must have the mission in setting the policies (Seuring & Gold, 2013). Therefore, according to the Harvard model to satisfy the interest of different stakeholders such as employees, managers, government, it is mandatory to develop good HRM policies by considering different situational factors so that they can manage the performance of different level of employees and achieve human resource related outcomes such as commitment, efficiency in cost, as well as congruence.

In early 2000, an innovative employee review system was adopted by Google but at the present time the organisation they involve their employees in setting goal along with that they also involve their employees in outlining the series of the results that are measurable in nature. Google follows a centralised performance management process that means their performance management process is same in every country and every branch of them (Mello & Mello, 2017). For measuring the performance, Google mainly involves their employees in rating process based on the five point scale that mainly ranges from the need of improvement to the excellent performance category. For managing performance, Google utilises peer feedback process, calibrating process and annual review process for discussing the payment structure. In their peer review process, Google involves employees and their managers to select a peer group that are generally junior employees and after that, they are instructed to list down some capabilities among employees that need to be developed (Mello & Mello, 2017). In the calibrating process, the managers of different groups are generally involved them in any meeting so that they can review the staff involves in their group. Google generally conducts an annual review of the performance of their employees so that they can decide pay structure of employees as per their performance which is one of the motivating factors.

Conclusion

It has been observed that in order to expand their branch in the different country, Unilever has conducted an effective merger and acquisition strategy (DeNisi & Smith, 2014). With the help of acquisition, Unilever has expanded their businesses through the subsidiary organisation for which in a different country the organisation has different types of performance management technique because in the different subsidiary organisation and in the main organisation of Unilever, they mainly follow different types of management style. However, the organisation manages the performances with the help of the assessment of strength and weaknesses of employees so that they can decide increment, incentives based on their strength and training and development strategy based on the weaknesses of Unilever.

Whether it is performance management or staffing or compensation management, the difference between parent company HRM strategies and its subsidiary strategies is clear. If a parent company wants to incorporate HRM practices, especially those related to wage, working hours, compensation, benefits, equality and respect in the workplace, the gap between parent and subsidiary becomes deeper. For example, Unilever needs to work under the supreme control of Legislation and Acts in the UK. The Equality Act, 2010 bounds both Unilever and Google to give equal pay, wage, benefits and respect irrespective of gender differentiation. However, the same companies are not such strictly bounded by in the US due to the loose legislative measures. This creates a problem for an MNE to use uniform HRM practices through all its business units. In case of Google, the company seems to adopt HRM practices in systems, organisational structures, staffing and performance management as well. A uniform less hierarchical structure is followed for all HRM practices, but in accordance with the local and regional policies, legislations, emotions and cultural aspects (Thomas & Karodia, 2014). However, the case for Unilever is different. Unilever has its specific strategies for its parent company and for its subsidiaries. In fact, the subsidiaries of Unilever work independently where there are no such similarities between the best practices followed in parent and subsidiaries  (Unilever.co.uk, 2017).

Another challenge faced by MNEs is that of cultural distance that bounds the organisations to implement HRM practices in all its subsidiaries. The transfer of HRM best practice faces its challenge in the form of institutional distance as well  (Cox, 2014).  While Subsidiaries are pressurised to make incorporate both internal and external legitimacy, it is the responsibility of the subsidiary organisation to make decisions on adopting strategies. It is required for balancing with the local cultural aspects that are very important to adhere to for the success of an organisation. In case of Google, neither in staffing policy nor in performance management system, the company has loosened its grasp over the subsidiaries (Thomas & Karodia, 2014).  The same policy is followed everywhere. Even after that, the company is running successfully. This can be referred as the effect of well designed organisational structure, system, corporate structure, corporate management, governance system and their good integration with the HRM best practices. Unilever seems to be affected by the cultural challenges and institutional distance which has resulted in lesser control over the subsidiaries in terms of HRM practices (Unilever.co.uk, 2017).

Conclusion:

Thus, from the above analysis, it can be stated that uniform HRM practices throughout an MNE are difficult. The major reasons identified are cultural differences, political and legal environment as well as the industry level environment.  As seen from the analysis, same staffing strategies can be overcome through same performance management strategies are difficult to implement. Companies like Google are rare though most companies like Unilever find it difficult to cope up with the most important challenge that is a cultural challenge. This led the MNEs to leave strategic actions on the subsidiaries. Therefore, it can be said implementing HRM can only be possible if the business environment, especially, political, cultural and legal environment are quite same or bear some resemblance. Otherwise, companies will find it difficult to implement HRM best practices throughout all subsidiaries.

References

Careers.google.com, 2017. How we hire. [Online] Available at: https://careers.google.com/how-we-hire/decide/#committee-and-executive-review [Accessed 09 September 2017].

Cox, A., 2014. Human resource management in multinational companies. Being Practical with Theory: A Window Into Business Research, 1(1), pp.159-67.

DeNisi, A. & Smith, C.E., 2014. Performance appraisal, performance management, and firm-level performance: a review, a proposed model, and new directions for future research. Academy of Management Annals, 8(1), pp.127-79.

Kim , Y. & Ployhart, R.E., 2014. The Effects of Staffing and Training on Firm Productivity and Profit Growth Before, During, and After the Great Recession. Journal of Applied Psychology, 99(3), pp.361–89.

Mello, F. & Mello, F., 2017. Google’s Performance Management Practices. [Online] Available at: https://www.qulture.rocks/blog/googles-performance-management-practices-part-1 [Accessed 9 September 2017].

Seuring, S. & Gold, S., 2013. Sustainability management beyond corporate boundaries: from stakeholders to performance. Journal of Cleaner Production, 56(2), pp.1-6.

Thomas, S. & Karodia, A.M.., 2014. Human Resource Practices at Google in Terms of Some Management Perspectives: Exploring the Entreprenurial Spirit. Arabian Journal of Business and Management Review, 2(3), pp.15-27.

Unilever.co.uk, 2017. HR brochure. [Online] Available at: https://www.unilever.co.uk/Images/hr-brochure-2016_tcm1252-494179_en.pdf [Accessed 9 September 2017].

Unilever.com, 2017. Human Resources. [Online] Available at: https://www.unilever.com/careers/business-function/human-resources.html [Accessed 09 September 2017].

Van Dooren, W., Bouckaert, G. & Halligan, J., 2015. Performance management in the public sector. Abington: Routledge.

Wright, P.M., Guest, D. & Paauwe, J., 2015. Off the Mark: Response to Kaufman’s Evolution of Strategic HRM. Human Resource Management, 54(3), pp.409-15.