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Friday, June 22, 2012

Human Resource Policies and Practices at Global Level

Human Resource Policies and Practices at Global Level

* Dr.Shanmukha Rao Padala & ** Dr.N.V.S.Suryanarayana

Concept of HR policies and practices:

A policy is a plan of action. It is a statement of intention committing the management to a general course of action. When the management drafts a policy statement to cover some features of its personnel programmes, the statement may often contain an expression of philosophy and principle as well. Although it is perfectly legitimate for an organization to include its philosophy, principles and policy in one policy expression, it is desirable for a student of HRM to separate a principle from a policy. The following statement is an expression of a principle or an objective: �it is the intention of the company to provide a safe plant and a healthy working environment'.

The statement is too general to be any use. A Policy statement on the other hand is more specific and commits the management to a definite course of action. The following is a policy: �our policy is to institute every practical method for engineering safety into our processes and equipment, to provide protective clothing where necessary, to train employees in safe operating procedures, and to vigorously enforce established safety rules. Our policy is to provide a healthy plant by giving adequate attention to cleanliness, temperature, ventilation, light and sanitation'.

A policy does not spell out the detailed procedure by which it has to be implemented. That is the role of a procedure. A procedure is in reality a method for carrying out a policy. A policy should be stated in terms broad enough for it to be applicable in varying situations. Lower-level managers who apply a policy must be allowed some discretion in carrying out the policy. The circumstances between two departments or sections or nations vary. Before we are going to discuss about the HR policies at global level, it is necessary to discuss the concept of globalization and its impact on human resource management.

Nature of globalization:

Globalization refers to the process of integrating world economies. However much governments desire to retain economic identities, the powerful trend to integrate national economies is sweeping across the global and counties are falling in line and embracing rapid globalization. Whenever it is the communist China or the communist party governed West Bengal in India, the anxiety to join world economies is the most emerging concept today. Evidence of globalization can be seen in the increased level of trade, investment glows and mobility of people across the globe. Also called internationalization, the momentum of globalization has been driven by several developments as explained below:

Drivers of Globalization:

Companies seek to take advantage, by expanding their operations into foreign markets, in a number of ways. First, rapidly developing economies have huge markets. For companies, mostly in developed countries, which have been operating below capacities, the emerging markets offer immense opportunities to increase their sales and profits. Second, many multinational companies (MNCs) are locating their subsidiaries in low wage and low cost countries to reduce their cost of production.

Third, changing demographics also add to increasing globalization. Demographic changes are more visible in India. The country has the largest number of young people in the world today. India has nearly 65 million children below 15 years age, and as many as 400 million youngsters below the age of 23 years. These young people will join the employable workforce in the next few years. Thus, creating a hung surge of productivity, incomes and savings. Indian has a large low-cost and skilled work force. This large labour poll is projected to limit increases in rates for the next 20 years. In addition, India has a high availability of engineers, producing over 400,000 every year, next only to China's 4,90,000 and nearly 25 times that of Thailand's 17,000. in addition to engineers, India produces 850,000 graduates every year and over 70,000 vocational skills certified professionals.

Fourth, regional trading blocks are adding to the pace of globalization. WTO, EU, NAFTA, MERCOSUR and FTAA are few of the major alliances among countries. Trading blocks seek to promote international business by minimizing trade and investment barriers. Fifth, the declining trade and investment barriers have vastly contributed to globalization. Sixth, the most powerful instrument that triggered globalization is Technology. Revolution is probably the right word which can best describe the pace at which technology has changed in the recent past and is continuing to change. Significant developments have been witnessed in communication, transportation and information processing, including the emergence of the Internet.

The Global Picture:

When it comes to business, the world is indeed becoming a smaller place. More and more companies are operating across geographic and cultural boundaries. While most have adapted to the global reality in their operations, many are lagging behind in developing the human resource policies, structures, and services that support globalization. The human resource function faces many challenges during the globalization process, including creating a global mind-set within the HR group, creating practices that will be consistently applied in different locations/offices while also maintaining the various local cultures and practices, and communicating a consistent corporate culture across the entire organization. To meet these challenges, organizations need to consider the HR function not as just an administrative service but as a strategic business partner.

Companies should involve the human resources department in developing and implementing both business and people strategies. This type of partnership is necessary if an organization wants to change potentially inaccurate perceptions of HR and reiterate the HR function's purpose and importance throughout its global environment. Organizations will also discover that HR can be invaluable in facilitating the development of a unifying corporate culture and finding and cultivating much needed leadership talent around the world.

The process of globalizing resources, both human and otherwise, is challenging for any company. Organizations should realize that their global HR function can help them utilize their existing human talent from across multiple geographic and cultural boundaries. International organizations need to assist and incorporate their HR function to meet the challenges they face if they want to create a truly global workforce.

Globalization and management:

A significant yet subtle shift has occurred in the area of management practice. While management is well researched and documented in the western countries as also in the EU countries, it is not the same with the APAC group of countries. The skill or the cost advantages that drive globalization efforts also impact the way people are managed in corporates. The older �personnel management' (Theory X) approach has given way to the �human resource management' (Theory Y) approach. The autocratic style that fed by �hierarchical position conscious systems' is being swiftly replaced by flat organization structures, driven by competency and a highly decentralized decision-making and problem-solving organizational hierarchies. The individual in a position of power, driving policies and processes have swiftly evolved into team-based collaborative management methods. Another landmark change in management methods initiated by globalization happened in the area of organizational leader ship. A new generation of leadership skills, styles and methods have evolved. The straight-jacketed approach to certain defined �good and bad' leadership styles has been replaced with multiple theories supporting a variety of leadership styles. Leadership today is associated with the particular phase in the life-cycle of an organization, it is industry specific and increasingly, leaders are hired to achieve a very specific objective for an MNC.

General challenges for global hr function:

Functions such as operations, sales, and marketing have generally made great progress in adapting to the global reality. However, the HR function has typically lagged behind in developing policies and structures that support globalization. The top challenges HR faces in the globalization process include:

Coordination of activities in many different locations.

Understanding the continual change of the globally competitive environment.

Building a global awareness in all HR departments/divisions.

Creating a multicultural HR team.

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