Strategic human resource management is a process which deals with the uses of various approaches and techniques to develop useful human resource strategies, which are incorporated with the organizational strategy (Cania 2014). The strategies are developed to understand the plans that are related to the performance of the organization along with the effectiveness of the strategies in the organizations and how the people of the organization are managed, developed, rewarded and how good the relations of the organization is with its employees. Strategic human resource management focuses on the various strategic changes in the organization so that it can grow and compete effectively with its competitors in the future (Treven 2017). Organizations in today’s time face great competition in the market and hence it has become important for every organization to make sure that their employees are happy with their work so that the organization performance is good. To establish this organizations today are adopting many strategies for human resource management to enhance the performance of the organization. Firstly, proper recruitment and selection techniques are used in the organization so that new members are recruited in the company who are qualified and the company can select the best qualified employees from the applicants. Secondly, continuous training and development programs must be arranged for the employees so that they can perform better as well as grow and expand their area of work (Purce 2014). Thirdly, the performance of the employees should be evaluated so that they can improve their work and also enhance their abilities and also because the company can evaluate the performance for the rewards and appraisals that would be provided to the employees. Fourthly, the remuneration and benefits that are provided by the company helps to motivate the employees and also to continue work with the organization. Lastly, there must be a good working relationship between the employee and the management. This enables the employees to reach the HR in case they face any problems and also helps the HR to solve the issues of the employees urgently (Budhwar and Debrah 2013). Hence, it is mandatory that these strategies are adopted by every organization nationally and internationally for good organizational performance.
There are many issues and challenges that are faced by a Human Resource Management director or an International Human Resource Management director in ensuring that HRM or IHRM is recognized in the strategic planning prices within an organization (Bratton and Gold 2017). Firstly, finding the right candidate for a job is a huge problem among the large number of applications of individuals that they receive. Changes are brought about in the selection process so that they can find the right candidate for the job and that the candidate is deserving to work in the organization. If the candidate fulfils all the requirements for the job, then the HRM or IHRM director has to ensure that proper training is provided ot the candidate so that they can expand their talent and expertise area (Brewster et al. 2016). If the HRM director is unable to do so then the organization would suffer as the wrong selection of the employee would mean that the work would not be done properly. Secondly, it is mandatory that the HRM directors understand the needs and wants of the employees. The employees in recent times are not just satisfied with the normal wages and salaries that are provided to them. It is the responsibility of the HRM director to understand the factors which motivates the employees and ensure that they are motivated at all times so that they can perform their desired work. If the employees are unhappy and demotivated with their work environment then they will not be able to perform with their full potential (Vance and Paik 2014). Thirdly, the HRM director has the responsibility of keeping a balance between the management and the employees. The balance is what would ensure a proper work environment. If the work balance is not kept properly then the organization will suffer drastically (Armstrong and Taylor 2014). Lastly, the employees should receive the promised salaries, incentives and compensations on time to keep them happy in their job. Individuals also love appreciation from their employers which motivates them to work harder and better. If none of these happen on the desired time then the employees would slowly lose interest in their work and may even leave the job for a better one where they feel appreciated and valued.
The three areas of HRM that are unique to IHRM and that supports the international corporate objectives are as follows. The first and foremost area is the cross cultural management. The difference in cultures and national values of the employees is one of the main factor which leads to the internationalization of the employees. There are many stereotypes that are faced by many individuals of many cultures when they are employed internationally. It is important that there is awareness in every organization regarding the difference that are found in different cultures (Brewster, Chung and Sparrow 2016). This is the responsibility of the IHRM manager to ensure that the organization understands the differences and treats the employees accordingly and without biasness. The traditional strategy of recruitment and selection of employees must be done by keeping in mind the international context of cross cultural management in the organization. There should not be any kind of biasness between employees due to their difference in culture. Secondly, comparative human resource management is another area. The comparative human resource management understand the extent of the difference of HRM in different countries and also between different areas in one country or different regions in the world. This is useful because different countries and even different regions can have different unions, languages, regional differences and economic difference (Cascio 2018). The difference in the employment systems is understood in this way so that the human resource is managed accordingly without any issues. Lastly, international human resource management is the major area which helps the international organizations to manage their employees around the world. This ensures that the organization is aware of all the legal and cultural differences in every country and must act accordingly so that no employment issues are faced in the future.
A Global Employment Company or a GEC is a separate legal establishment that aims to provide services to employees of other organizations in exchange for a fee (Pwc.com 2018). The fee that is taken is used to pay the employees that they look after, to operate smoothly the services that are given by the GEC and also to incur a profit for the GEC. The GEC is interpreted as a contractual employer for a specific group of individuals or global employees who travel to other global organizations. A GEC is based on a jurisdiction which has a treaty for wide tax, which enables companies to provide those kinds of services which are cost efficient (Lakhani, Kuruvilla and Avgar 2013). However, the GEC format and location will always be based on the objectives of the company. GEC could include both the whole global workforce and a small group consisting of senior employees. For example, Airswift is an organization who provides international workforce solutions to many corporations. They provide database of their candidates who are available for job vacancies on other countries. They acts as a global employment agency and have helped many major companies to handle their employment service.
The key functions of a GEC is as follows. Firstly, GECs employ internationally mobile employees or IMEs. Secondly, the GEC acts a company on lease which looks after the employment, the compensations, income and the benefits that would be availed by the IMEs and also takes care of the immigration and tax matters of the IMEs. Thirdly, the GEC arranges for the assignment letter to the IME (Donaghey et al. 2014). It then pays the IMEs or arranges for a third party to pay them. The pay can be the income, compensations or the benefits and other administrative considerations that are promised to the IMEs. Fourthly, GEC acts as the employment vehicle option for ensuring a more mobile workforce for those employees who wants to serve globally and expand their work area and expertise (Sidani and Al Ariss 2014). Fifthly, the Global Employment Company is that vehicle which extracts several efficient employees from around the world and provides them with various benefits from a centralized point. Lastly, GEC keeps in mind that all legal and compliance issue be properly arranged and managed so that no risk is faced by them or the employees in the future. The above mentioned points are the key functions of the Global Employment Company (Gereffi and Fernandez-Stark 2016).
Other than the GEC, there is another workforce deployment model known as a Special Purpose Vehicle (SPV). A SPV is a separate legal body just like the GEC, which is protected from the financial risks of the parent company as it is a subsidiary of that company. A SPV only performs the administrative services of the employees but does not act as their employer (Acharya, Schnabl and Suarez 2013). The SPV carries out certain specific business activities outside of the parent company, and hence saves the parent company from any kind of financial issues such as bankruptcy, insolvency and others. The SPV is used as a means of funding structure or for business transactions and acquisitions. The SPV has liabilities and assets and also a legal status which is outside of that of the parent company to protect any harm to the company (Zou et al. 2014). For example, a SPV can help an organization to make separate terms and conditions, compensations, benefits and payroll system for a set of IMEs. However, a SPV will only focus on the administration and the efficient of the operations of the IMEs, and not enable the full GEC approach of full responsibility for the IMEs. SPV is an alternative of GEC which has been adopted by many organizations in recent times.
There are many benefits and challenges to using a Global Employment Company. Some benefits are as follows. Firstly, GECs are more cost efficient and operate more efficiently as well, because the functions that they provide can be streamlined. Secondly, all employee data that is stored with the GEC can be easily accessed (Barrientos 2013). These data includes the benefits and the compensations that are provided to the employee, the tax liabilities, the term of the assignment that is provided to the employee and such other kinds of important information. These easy access of data is important for regulatory requirements and limiting the tax liability of the employee. Lastly, a GEC has a consistent HR policy for the global workforce of the organization. These policies can include the global benefit scheme of the employee or the global retirement policies that are specially made for each employee. Some challenges of a GEC are as follows. Firstly, there are certain issues that occur when an employee is being employed by a GEC. To implement a GEC, the employee has to first be terminated from their employment options in their home countries and then be employed by the GEC. This can become very expensive because of the payments that needs to be made on termination from the home country. Employees also sometimes demand compensations for the loss of their social security numbers. Furthermore, employees who do not want to remain a global nomad for an indefinite time and wants to return to their home country after a short term of international employment may find employment issues. Secondly, the employee normally has to comply with the laws of their home country, instead of the jurisdiction in which the GEC serves. This may cause regulatory issue regarding payroll and other compensations which can be problematic for the employees.
It can be said a GEC can successfully help the employees to expand their employment capabilities and also enable the growth of the talent pool. For a successful operation of a GEC there are certain steps that should be taken. These include the proper law compliance of employment laws so that the employees do not face any issues internationally. A GEC should also clearly state the different roles and responsibilities that they are to function on so that there is no communication issues with the employees, If these activities are correctly taken care of then GEC can operate smoothly.
In the case study, Akiko Nishimura is an employee who works for a German based multinational enterprise in Tokyo. The company send Akiko for a three year international assignment contract to New Delhi, because of which her husband leaves his job and shifts there with the whole family. After a certain time, a job opportunity arises for Hiroshi, Akiko’s husband because of which Akiko wants to transfer to Singapore. She contacts her HR manager Puja Malik, who states that due to the emerging need for employment in Asia and the impact of globalisation, it has become expensive for the company to fund any international assignment for more than three years (Dowling, Festing and Engle 2009). The SWOT analysis of the local international policy based on the case study is stated below. The strength are as follows, it is more cost effective for the company, there is increase in the equity pay in host countries and responses are made on the emerging needs of the business. The weaknesses of local international policy are, that there is a lack of benefits for the employees, the packages provided are not attractive for the employees, the employees are dissatisfied, the policy is not applicable to all the nations and there is reduced mobility if the employees due to localisation. The opportunity of this policy is that the cost of business expansion is saved as there is low cost for the company and low expatriate costs. The threats of the policy are that there can be an issue due to the reduction in the mobility of the employee if the company wants to change and that there could be huge loss for talent in the company and a high rate of employee turnover. There are certain recommendations that can be made from the SWOT analysis of the above case study. Firstly, the cost of international contracts should be not just based on the role of the employee and the status of the home country, but on the role that the employee performs internationally. Secondly, there should be better communication from the organizations to the employees about the change in policy when working in international contracts. This can help the employees in understand the losses that they will suffer when they are on the local international policy. For this the company should prepare a proper manual that every employee who are aiming for an international contract can study properly. Secondly, there could be incentives in the local international expatriate package based on the merit and the work of the employee. This helps the employee to remain motivated even they certain loss could be suffered by them. The incentives can be money or any other benefits that are being provided to them which can ensure that the employee can have a motivated work condition during their tenure. Compensations help in maintaining the human resource and talent of the company and also helps in development of the employees. Thirdly, the organization should also understand the different factors that causes job satisfaction and motivation for the employees other than money. The understanding if these factors can help the organization to retain their employees and enable them to provide better work. It could be their job roles, the environment that they are working in or even the nature of the work that they are doing. Fourthly, the employees should get the desired output from the input that they give to the company. The time and effort that is invested by the employees into the company must be rewarded by the organization in terms of timely salaries, incentives and compensations at the right time. This will make the employees into working more efficiently and without any complain. Fifthly, a more standardized policy should be constructed by the organization before it is communicated to the employees. A policy which focuses on both the benefits of the employee and also the betterment of the company should be constructed. Lastly, the company should understand the economic value of its employees and the knowledge, skills that they possess and determine that they are the intangible assets of the organization. If the organization comes in terms with this factor then they will be able to better retain the employees with social policies so that they do not lose the talented employees that have worked for them. These recommendations, if followed, can help the organisation to keep their employees satisfied with the job and also make their international work experience smooth and developing. Hence, it can be said that the threats and weakness of the local international policy can be eradicated slowly with the help of these recommendations.
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