Environment for business has changed considerably in many parts of the world. These changes have brought many kinds of challenges for the multinational companies. The operational units like Human Resource Management have been affected by these changes in the environment. It is essential that a company analyses all the current trends in the business as it has direct effect on the operations of the firm (Briscoe, Tarique & Schuler, 2012). In the coming future the problems in front of the company is going to increase and hence company need to understand the trends and need to be ready for it. In the increasing demand for technically skilled labours having high market value has changed the global employment scenario. Even the operations of HRM is conducted through the technological mediums hence their impact becomes more significant. This report describes three challenges that any multinational company is facing in its international HRM. It also analyses the ways in which these challenges impact on the future Human Resource Practices.
In any industry there are many new trends emerging from time to time. These trends are posing challenge to the business and the units under the organisation. Since multinational organisations have business units in various parts of the world hence it is crucial that they manage their operations as per the global environment (Armstrong & Taylor, 2014). In any MNC changes that are made in the company needs to be implemented in other parts of the world also. Some of the common challenges that any international HRM of any MNC faces are specified below.
Technology has changed significantly and the changes are very fast. It is very hard and exhausting approach to keep changing the technology as per the innovations that are going on in the world. Since these technological changes only brings the challenge for the customers in terms of financial capabilities but it also brings challenge in terms of training the employees (Bratton & Gold, 2017). Technological changes bring the change in the operational procedures for which companies will have to be ready for. This cannot be possible without company providing training and development sessions to all their employees. Apart from this it is also a challenge for the international HRM to make policies so as to use it in an effective manner. In various cases it has been seen that technology has replaced the human workforce. This is most in the case of new technologies like artificial intelligence and transformations such as automation (Guest, 2011). Whenever a company makes changes in the technology, there is a feeling of uncertainty in the minds of employees regarding their position. There is a threat of job cuts. International HRM has to see through the matter in an effective manner so that may not face challenges such as lockouts or protests. Apart from this the operations of the HRM are also conducted with the help of technology. This has increased the pace of the process in the International HRM (Buller & McEvoy, 2012). Along with these, technology has brought the issues such as privacy which is a serious matter of concern for the international HRM. This is due to the fact that any international HRM has many types of data related to the employees and with the increasing use of technology there is a chance of threat to data privacy. Since the hiring process is done in various parts of the world hence MNC requires a data to be stored at central location which can only be done with the help of technology.
In international HRM, companies need to think about series of challenges that are confronting their workforce development. The emerging trends in the MNC’s like outsourcing is further a challenge in case of technology change. This is because the quality that a company expects from the employees needs to be delivered and for which an external training sessions have to be provided (Jiang, Lepak, Han, Hong, Kim & Winkler, 2012). Offshoring and maintaining technology change is further more complex process. Such changes are further difficult to maintain in the countries that do not have high quality technology infrastructure. The challenge becomes greater as in any MNC there are many people from different cultural background. This change in the cultural background gets reflected back in their understanding about the technology (Human resources, 2018).
Educational background of the people is another matter of concern for the international management in any MNC. Since the pattern of education is changing in various parts of the world and hence it is crucial that MNC also maintain the balance between the requirement of the firm and the talent they are accessing. The educational requirement of the organisation has also changed this has produced the problem for the international HRM to recruit people that suits this requirement. This can be understood by the example of technology use (Choi & Ruona, 2011). As in some countries people have technology in their education and hence it is easier to train them on the use of technology. On the other hand in some countries people do not have access to the technology and in spite of the fact that they are academically strong, it is difficult to train such employees. IHRM of various MNC are looking for the talents that are handy in the use of technology and has higher grabbing power. There are many people that are coming to the business units from different cultural backgrounds (Bodi, 2016). Each of these people has access to different types of education which might not be of the standard of what company demands. This problem is severely faced by the company at the time of expansion.
Educational background has a huge touch of the culture from which they belong to. In many parts of the world the standards of education is poor. In such case IHRM has to rethink about the recruitments. Most of the time, it is seen that company has to hire local employees and hence communicating them the company’s culture is a major challenge for any HRM (Kehoe & Wright, 2013). In many cases educational impact can also be seen in the way employees are performing. It is essential for any company to maintain the balance between the employee’s performances in every part of the world. It has been seen that MNC goes to the best universities in the world so as to hire talent that can add more value to their business. This is the reason that in most of the bigger IT companies there are more Asians working irrespective of the country in which company is established.
Due to changing global business environment, there are many changes that are going on in various parts of the world. In such an environment managing employee strength and quality is a serious challenge. Mobility has been a challenge for the MNC in various parts of the world (Deresky, 2017). It is essential that company understands the ways in which this challenge could be overcome by the IHRM. The changing political scenario has restricted the mobility of the talents from one country to another. Globalisation had empowered people to move from one country to another in search of jobs. The changing policies of the government especially in terms of hiring people from other countries are a serious challenge for the HRM. The Asian people are the biggest migrants in search of jobs. The rules of American government like the blocking the H1N1 visa had greater impact on the migrants. The decision like Brexit also has impact on the mobility in the European region. Rapid business change, shift towards developing markets, specialisation generating new job models and career, a borderless workplace, increasing competition for talent, new style of leadership are some of the things that are impacting on the IHRM. The increasing difference among the development of various countries has influenced the mobility which is further affecting the talent management. One of the significant effects of it can be seen with the fact that there are many people that have migrated from one country to another due to scarcity of job (Stahl, Björkman, Farndale, Morris, Paauwe, Stiles, … & Wright, 2012). This can be an opportunity for the MNCs.
Changing policies of the nation has created legal, political and economic challenges for the MNC as they have to comply with all these. The cultural background has effect on such mobility. Firms are hiring more people from the countries that are culturally similar. This is again a challenge to the diversity of the MNC which is very important for the holistic development of the organisations environment. MNC’s are also hiring people from the countries that have lower cost wages or say that the people of these nations are ready to work at lower cost wages. In the business environment where maintaining standards has become extremely crucial, it is essential that a company has all the employees being skilled and educated. If any firm does not find employees from one country being so capable they hire them from the other nation (Thompson, 2011). This has been a major reason for the mobility.
All these above mentioned challenges have deeper impact on the business activity of many firms. The HRM practices are going to get influenced by these challenges confronting their business (Gallardo-Gallardo, Dries & González-Cruz, 2013). The impact has been described below.
Technology is used in every organisational unit and almost in all the operations that a company performs. This is having effect on the operations of the firm and the way in which employees perform. IHRM has to be ready with the policies and the procedures using which they can easily give priority to the technology based operations which will help in increasing the productivity of the firm (Scott, Heathcote & Gruman, 2011). In future with the improvement in the automation the chance of jobs cuts increases hence managing the responsibility such as reducing unemployment can be very difficult for IHRM of MNCs. Technology has empowered the firm to manage the data related to the staffs and also helps the company in streamlining their workforce capability. In the variations of the culture that is present in any MNC, there is a strong chance of conflicts that can arise among the different stakeholders. In future the recruitment will be done through online tests and interviews. This will not only help the MNCs to restrict faults that are caused by manual process but also helps in conducting the whole process at a much faster speed (Avey, Reichard, Luthans & Mhatre, 2011). This is also because the scrutiny and the selection processes are done automatically with the help of software. The data filled by the applicants gets stored in the database which can be used for future reference.
Education is having greater impact on the IHRM. More the people becomes educated easier will be the chance that IHRM can easily manage its operations. In future, MNCs could hire the staffs from different educational backgrounds which will help them in doing activities in other parts of the world very easily. In future when the technology requirement will increase the IHRM will look for the talents who have command over the business operations (Inkson, Gunz, Ganesh & Roper, 2012). People from the higher educational background can be easily getting jobs in the MNC even when they reside in any part of the world. Quality of education is the first priority that a firm demands from any candidate at the time of hiring. The increasing labour costs that are not highly educated pose a threat to cost cut measures taken by the company. In the years to come number of graduate unemployed workers is going to increase in certain parts of the world. It would be a challenge for the MNC to maintain the balance between the reduction in jobs as well as providing new job opportunities. Educated employees demand for long term job opportunities while the companies in today’s business environment are not ready for giving jobs for long term (Anitha, 2014). Contract jobs are preferred by the MNCs in various parts of the world.
The trends show that in future there will be more people migrating from one part to another in search of jobs. With the increasing mobility, MNC will face challenges related to diversity at the same time it might also face conflicts between different stakeholders. There are many people from different sections of the society and hence maintaining the feeling of unity might be a bigger challenge for IHRM (Bloom, Genakos, Sadun & Van Reenen, 2012). Providing equal opportunity to each and every people irrespective of the cultural background they are from is the first priority of the IHRM. Mobility is also going to influence the wages of the people as companies will try to hire people that are from the lower wage countries. The concepts such as outsourcing and offshoring are going to spread more. People in various parts of the world are moving to new destinations in search of jobs.
As per trends, mobility in future is further going to decrease due to new employment rules made by different governments in various parts of the world. This might create a situation of talent gap between what is required by the organisation and what is available with the firm at any business unit (Keep, 2014). The unambiguity in the political situations all around the world is a serious challenge for the organisation. In the increasing economic challenges in different regions of the world, mobility will be affecting the international HRM to a greater extent. Economies like India are becoming bigger service market and their cultural diversity is huge hence IHRM will have to face the challenges related to managing employees.
It is not so easy for the MNC’s to measure the extent of impact that any factors is posing to their business. The annual report of the organisation needs to be specific and should align towards the challenges they are facing in the market. IHRM needs to train their employees at regular intervals. With the up gradation in technology, skill development becomes very crucial especially in terms of the way in which new technology is used. Education culture needs to be developed within the organisation so that the people that will come in the company will have high quality education. Companies should also take care about the fact that the employees that are coming to the organisation. Human resource policies needs to be designed in such a manner that challenges related to mobility could be tackled.
Conclusion
From the above based report it can be concluded that MNCs have business units in various parts of the world and hence managing the issues related to the IHRM can be a difficult job. There are various trends in the IHRM in which technology, education and mobility is producing challenges for the HR department of any MNC. Multinational Companies are demanding for employee strength that is more techno friendly as well as are capable of operating on various technology platforms. Higher and quality education is a demand of the modern day business firms for giving employment to people. These three factors will have impact on the operations of IHRM. All these factors have long term impact on the operations of IHRM. It is essential that company understands these impact and plan for the future so that they may not face any significant challenges in future. The most significant impact could be seen on the diversity management of any firm.
References
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