The dynamics of business in various parts of the world has changed. This had a serious impact on the operations of the firm which ultimately gets reflected back in the IHRM practices. Because of the change in the business environment and flexibility in the demand of the market, there are many challenges arising for the firms. These challenges become more severe for the companies that are operational at international level (Al Ariss, Cascio & Paauwe, 2014). These challenges have affected the policies that are made by the IHRM for itself. The trends in the future is going to increase and will have larger impact on the operations of International Human Resource Management. This report describes the challenges that are faced by the International managers due to different types of factors. The three factors that have been selected in the process are technology, diversity management and educational system. It also illustrates the way in which these challenges are effecting the business operations.
With the changing business dynamics, there are many challenges that are confronting the business of the multinational corporation. In all these challenges there are some major challenges that the modern day International HRM is facing (Brewster, Houldsworth, Sparrow & Vernon, 2016). If the company does not face these challenges with proper strategic planning then it might become severe problem for the organisation as well as the HRM present in it.
In the era of digital business, the use of technology in the business operations has increased. Technology is also being used in most of the activities of Human Resource Management. Since technology is changing at much faster speed and companies are adopting it. This is done for improving the effectiveness of the employees. In order to achieve highest of benefits from the business operations, effective utilisation of technology becomes highly essential. Since technology is connected in all the operational units of the organisation hence there can be chances of data privacy (Briscoe, Tarique & Schuler, 2012). If the technology is not used in an effective manner, there might be chances of some big data leaks which can be dangerous for the organisation and its business. With the advancements in technology like the use of automation in the business process, the challenges for the IHRM are going to become more severe. Companies are demanding for the training that helps the employees to enhance their quality of work and hence the role of technology based learning has become more crucial. The real problem with the technology is that it is multiplying with the speed that is unmatchable.
Automation has led to huge job cuts which is a major challenge for any multinational organisation. As they have to manage the business operations as well as they will also have to ensure that they do not make huge job cuts. This affects the image of the company in front of the stakeholders or might also interrupt business operations. For example most of time, it may lead to situation such as lockouts or strike outs which is very harmful for the business operations as well as the environment of the organisation. In the future this problem is going to increase and hence company has to be ready with the plans and policies to make workforce reduction (Budhwar & Debrah, 2013). The reduction has to be made in the long run so as to ensure that least number of people get effect by this process. Technology skills must be the major criteria for hiring the staffs so that there could be minimum training requirement.
Even the recruitment and selection in today’s time is done with the help of technological mediums hence effective utilisation of technology becomes more crucial. The recruitment and selection process becomes easier and faster with the help of technology. For example large numbers of people can apply for any vacancy at a single go. The filtering of the best contestant can be done easily with the help of technology (Caligiuri & Tarique, 2012). The technologies such as data management software can help in scrutiny of the candidate. The communication process that will be required at the time of the whole recruitment and selection process also got fastened due to technology implementation. With the help of technologies such as e-mail large number of candidates can be informed at once. Apart from this the technology such as video conferencing allows the IHRM to directly interact with the candidate so they do not need to travel to other part of the world just for having an interview.
With the further introduction of technology such as IOT the training requirement is increasing day by day. This is because the technology is becoming more complex. Training all these employees at the same time can be a challenge for the company as their training needs are different and the requirement of the skills also differs. Since the employees have different grabbing powers in the organisation hence personalised training needs to be provided to the workers (Cullen & Parboteeah, 2013). Apart from this, there are people that are from the technological background whose training needs are different. Apart from this technology also helps in providing the training to all the people. For example a managers sitting in any corner of the world can easily give training to many people at once sitting in different corners of the world just with the help of video lectures or training sessions. Technology is also affecting the methods through which training is provided. For example the animation technology and the modern day tools can help the IHRM in providing training that looks real and employee friendly.
With the increase in the mobility of the people from one country to another, there are large numbers of people working in some other country. In the multinational organisations there are many people working at the same floor from different cultural backgrounds. This diversity is a challenge for any HRM. This is essential for the diversity management at the workplace. When there are two people from the countries that may not have good relation then managing the situation becomes difficult (Deresky, 2017). Talent management and diversity management are two different aspects and require large number of strategies to be implemented. Language barrier is most common at the workplaces with huge diversity and is very harmful for the communicational process practice. Diversity brings new ideas to the business process. Whenever a company fails to bring diversity at the work place there is always a chance of stagnation in the ideas. Diversity management has a direct impact on the performance and the image of the company. In IHRM department only there is a huge requirement of diversity so that the problems related to different employees can be understood. With diversity many issues arise in front of the company especially in terms of cultural respect at the work place. If the culture of the organisation does not support the individual cultures of all the workers then it might lead to huge loss for the firm. The impact of the diversity management is that it brings positive environment at the work place. Company might also face challenges related to policy making as it might affect the cultural aspect of any particular employees (Doherty, Dickmann & Mills, 2011). Language and behaviour must be the prime criteria for diversity management and needs to be managed in a better manner.
They have to check that equal opportunity must be given to the people irrespective of the colour, gender or race. Diversity management has a direct impact on the recruitment and selection by the IHRM. With the increasing political pressure of the government to hire local employees has affected the talent pool that a company has at any workplace (Gruman & Saks, 2011). Since government norms regarding employment have changed. This change has affected the number of people that are coming from other nations. For managing the diversity, IHRM has to look for the loop holes in the recruitment and selection process. Technology might help in enhancing the scope of the IHRM hiring people from different parts of the world.
Diversity management has a greater impact on the employee relations. It is crucial that company attempts to maintain positive environment at the workplace. In the MNCs since the people are from different cultural backgrounds hence it is essential that company makes equal plans for every unit within the organisation (Guest, 2011). If the diversity is not maintained then there can be serious challenges for the employee relations among the people at different levels in the organisational structure. A better employee relation can be maintained only when the people from all the community, cultural background or different age groups gets equal chances within the organisation to grow. If there is no partiality in the recruitment process, then there is a chance of better employee relations at the workplace. While providing compensation and benefits, it is crucial that company maintains the diversity at the workplace. For maintaining diversity, they need to give equal wages to all their employees irrespective of their differences. At the same time they also need to consider the fact that there are people from different sections of the society and there must be differences in their understanding (Harzing & Pinnington, 2010). If Diversity management is not maintained in an appropriate manner, there is a chance of people might get upset and may lead to increase employee turnover.
Educational system influences the functions of IHRM in any organisation. This can be understood by the fact that there are people from different types of education backgrounds and hence the requirements of the people are also different (Iles, Chuai & Preece, 2010). In multinational organisation people come from different countries and in such an environment, it is crucial that company has a common base for recruiting staffs.
Educational system has a direct impact on the benefits and compensation that is given to the employees by the organisation. A technologically advanced people in the modern day business can easily achieve higher compensations and benefits. The demand for the benefits and compensation is increasing from the side of the workers (Kolk & Van Tulder, 2010). This increase in the demand has forced the IHRM to rethink about the benefits and compensation that a company is giving to its employees. With the increasing workload on the employees, their demands have also increased. This has forced the organisations to provide better benefits to the employees. It is crucial that company understands that people from different educational system will have different understanding about the compensations and benefits.
Educational background of the people is defining the criteria using which company can provide compensation and benefits. The more the employee is qualified and skilled, more is the chance that people can gain higher compensation and benefits. It is also linked with the country’s educational system (McDonnell, Lamare, Gunnigle & Lavelle, 2010). For example the student coming from the hi-tech university has a more chance to learn new technology hence a greater scope for higher compensation and benefits. Education system also grooms up the person and hence it has its effect on the motivation of the employees. Employee motivation is essential for increasing their productivity. Highly skilled employees will get satisfied only due to higher compensation and benefits provided to him or her. On the higher hand the person that is less educationally qualified can be maintained with lower compensation and benefits (Momoh, Roy & Shehab, 2010). For example a manager always needs a higher incentive than a labourer or an officer at lower level. Employee retention also depends upon the compensation and benefit that a company provide to its employees as it motivates them to do extra work. The service sector is demands for high incentive plans.
Educational system also has a direct impact on the training and development. This is because the person coming from the highly advanced education system will not require high standards of training. Just a little brush up could help him excel in his or her role. In a high standards educational system people gets high standards of training and education. This is the reason why companies are also recruiting and selecting people from the country that are from the advanced educational backgrounds (Randstad, 2016). For example Indians are considered to be one of the highly talented employees that are from the educational background which supports their operational methodology. They are also ready to work at lower wages that the employees coming from the educational systems like UK and USA. On the other hand people that are from the poor educational system always need a higher amount of training. This is also due to the fact that their initial level education has not been up to the mark. If company fails to do so they might face challenges related to high employee turnover.
There are several other problems and challenges that modern day HRM are facing other than these three. But these three are disturbing not only the HRM practices and policies but are also affecting the operational procedures that company has been following over the years. In the longer run this is dangerous for the company and it might affect the business of the firm (Redpath, et. al. 2013).
Conclusion
From the above based it can be concluded that International Human Resource Management is facing many types of challenges due to change in the global business environment. The factors such as technology, diversity management as well as compensation and benefits have influence on the work of the IHRM practices and policies. Technology is not only helping the IHRM in their work process but also posing new set of challenges like training and development and reduction in the job. These three challenges have a long term impact on the performance of the IHRM and company. Technology is fastening the process of operations while diversity management is affecting the decision making and the quality of work that is delivered by the people. On the other hand, educational systems are affecting the performance of the employees and hence are challenging the operations of IHRM.
References
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