In today’s society, there are corporations that are making huge profits from customers on a daily basis lining the pockets of Upper Management, CEO’s, and the Owners. The essential part to any company is the Human Resource Department also known as HR or HRM. This department aids in the training and development of its employees.
The company is making an investment in its employees to maximize the benefits of its employees. One of a company’s most expensive assets is its human capital, the human resources of the organization.
(ITAP International, 2010) An organization’s success depends on the knowledge, skills, and abilities of the employees. The Human Resource Department has come a long way in the last few years in becoming the “central part” or the nucleus of a company. Human Resource Management is the voice of both the employee and the employer. The relationship between human resources and management is becoming more collaborative. Human resource executives are beginning to earn a seat at the management table.
(U. S. Office of Personnel Management, 1999)
The primary functions of the human resource department is to supply professional service, establish recruitment, develop promotions, maintain selection, communicate personnel policies to the entire company, to promote loyalty representation for personal control over time, help, advise, and consult with the employees of the company. (McCormick, 2000) The employees of the company should look at the human resource department as a neutral ground where they can take their complaints; seek for help and information; expect a fair and impartial hearing; and feel comfortable that human resources will provide a learning theory and an environment of trust and confidentiality. (Robbins, 2003) If the human resource management personnel are successful, employees would not have a problem with their expectations. The human resource department’s ultimate job that comes before any other is to provide the needs of top management of the corporation first and foremost.
Joseph Campbell stated, “Economics and politics are the governing powers of life today . . .” (Campbell, 2006) . The main difference between domestic human resource management and international human resource management is the added knowledge and responsibilities required due to foreign operations. These typically include language; the local and national regulations and laws governing business operations with a foreign county; currency exchange rates; career outlooks; company benefits and incentives; and the most important, the ethics and etiquette expectations of foreign business contacts. (McNamara, C., 2007) The examination of political and legal factors affecting global human resource management ties in with international business practices.
They both go hand in hand of how the two should work together as far as hiring the best; keeping the business together; and making a large profit. Increasing international competition in other countries demands the need to have an effective human resource management in order to effectively gain a competitive advantage in the global market place. Companies that enter the global markets must recognize that these markets are not like in their own countries such as America. Foreign investment differs in each country and will determine how the company will be built.
The political and legal factors can affect human resource management in global markets. Regulations imposed by the country’s legal system can strongly affect human resource management. The political and legal system can dictate the requirements of human resources such as training, pay compensation, hiring and firing, and layoffs. The legal factor pertains to the matter of what constitutes as legitimate behavior. For example, in America, we fight against discrimination in the workplace whereas in other countries, the employees have a direct influence on the important decisions that affect them such as new strategies that would directly affect hours, payment, hiring, and transfers. Description of the Problem
The effective management of human capital will be pivotal to an organization’s ability to survive and thrive. (http://www.anderson.ucla.edu) Political and legal factors are affecting global human resource management. Human resource management became global when companies start to ship their products and to build companies overseas. Business owners found it cheaper to manufacture products and offer services in other countries. As a result of this, where is the fairness in an American business owner outsourcing jobs internationally and robbing the American people of jobs in order to live and take care of their family?
One of the jobs of human resources is to employ/hire people who are reliable and capable of achieving the goals of the company. In order to do this, the potential employee must be able to understand the goals set forth. If the goals are not met for whatever reason, then there are grounds for termination or the company will fail. There are a few political and legal factors that are affecting global human resource management. A few of the political factors are as follows: government legislation, tariffs, trade restrictions and quotas, and the environment. A few of the legal factors are as follows: employment law, description law, consumer law, and health and safety concerns. Regardless of the business aspect of the political and legal factors of the human resource department, the customer is the most important factor overall. The customers are the ones who generate the huge profits and aids in achieving the company’s overall goals. The best advertisement is word of mouth, which is free publicity or advertisement. Which weighs more, negative advertisement or positive advertisement? It depends on the quality of the product of service.
Political factors are often times referred to political decisions, conditions, events, or activities that would affect the business. The political factors can cause investors to earn less money than forecasted. The most common political systems that are global are political systems that are a democracy, a totalitarian system, and a mixed economy.
Legal factors that are associated with this problem refer to consumer protection, product guidelines, forming contracts, and liabilities. There is a high demand for international business lawyers who are capable of understanding how to use their skills and knowledge internationally in order the combat the legal factors pertaining to global human resource management. The Purpose of the Research
The purpose of this research is to better understand the various reasons for international business practices and hiring practices as it applies to the political and legal factors affecting global human resource management. We need a further understanding of how international business practices tie into human resource management. We have to understand the ethics of human resources and how human resources deal with the political and legal issues in a diverse way. The common practices that are used in America are not as effective in other countries because of diversity. The current issues and perspectives affecting managing human resource management in America are how changes in the business environment affected this type management; there are issues that have escalated in importance over the last few years; and there are more issues that has to be analyzed that has recently emerged as concerns. (Werner, 2007) Better yet, can the practices used in America and practices built in other countries be merged to construct a better policy? While there has been a growing interest in the transition of economies in the past number of years, the contemporary nature of human resource management in Central and Eastern Europe is not well documented. (Morley, 2008) History, Setting, and Background of the Problem
Globalization has been a part of history long before 1492 when history speaks of Christopher Columbus discovering America. Globalization is not necessarily a bad thing; it just means that the world is becoming a whole instead of being divided. Just because goods and services are produced in another country, we have to look at it along the lines of sharing our talents globally. Just think, we have done this unconsciously for years when it comes to cars, clothing, food and more. We simply wanted what we thought was the best. The reason Americans are bitter and come to the understanding of globalization is because we were once depending on the manufacturing plants, farming, and other ways of making a living. Jobs were once plentiful in the United States and there were not any worries like we have today. The money is tight and sacrifices are high. Now that we are in a Technology Revolution where things are controlled by computers, it seems to make things worse for those who do not have the knowledge of using computers and are “afraid” of the new technology when things were once hands on only. As a result, the “digital divide” came into existence.
As far as outsourcing work to other areas of the world, the heavy markets involve Asia, Europe, Latin America, the Middle East, and Africa. Even though human resources aided in the hiring practices of the businesses in these countries, there were politicians who were and still are against globalization and want to see Americans get their lives back by creating more jobs for Americans. According to Eduardo Porter in the article “International Business; Outsourcing is Becoming a Harder Sell in the U.S.”, The survey of 7,300 senior executives from companies around the world found that roughly four out of five executives said that outsourcing was good for the global economy, an approval ratio that was virtually the same in Europe, Asia and the United States and is in keeping with the views of many economists. But when the executives were asked about the effects of outsourcing on their own businesses, the executive consensus broke down. In Europe, 70 percent of executives said outsourcing was good for business. So did 86 percent of Chinese executives and 97 percent of those in India. Yet in the United States, headquarters to many of the most aggressive and successful globalizing companies, the fraction of executives that said outsourcing was either very positive or somewhat positive for their company dropped to 58 percent. (Porter, 2004)
Scope of the Research
The scope of this research will aid in understanding how human resource management evolved from being a personnel department. This research will also show how the United States is the leader in Human Resource Management. Some specific areas of political and legal factors will include International Trade Laws; compensation packages; labor laws; and cultural adaptation. Importance/Significance of the Research
The significance of this research is to acknowledge the importance of human resource management from a global perspective. The global and political factors in which both human resource management and international businesses should be concerned about are recruitment selection and training. This will determine whether or not the business will survive in the international market. It is commonly known that the United States sets the foundation of human resource management. There are 7 key trends influencing human resources and they are as follows: Globalization of human resource management calls for governance and compliance Talent Management moving beyond the hype
Employer Branding by achieving brand awareness
Social Innovation drives smart working
Leadership and Organization development
Addressing the global sourcing challenge
Key Performance Indicators: managing human resources means measuring human resources (Lettink, 2009) Definition of Terms
Human Resource management- is the direction of organizational systems to ensure that human talent is used effectively and efficiently to accomplish organizational goals. Business Ethics-Is a form of applied ethics that examines ethnical principles and moral or ethical problems that arise in a business environment. Global Organization-Firm that has corporate units in a number of countries that are integrated to operate worldwide Political-Concerned with or engaged in government politics
Legal-Based upon law or permitted by law
International-Concerned with the relation between nations
Personnel- Persons employed in any work, enterprise, service, etc. Policies. General guidelines that focus organizational actions. Benefit. Indirect reward given to an employees or a group of employees for organizational membership. Recruitment- The process of generating a pool of qualified applicants for organizational. Cultural-Societal forces affecting the values beliefs and actions of a distinct group of people.
REVIEW OF THE LITERATURE
While reviewing the literature, human resource management could be considered as one of the most crucial aspects within the business environment. Human resource management is very specialized and it is significant for the success of any organization. Human Resource management itself is the direction of organizational systems to ensure that human talent is used effectively and efficiently to accomplish organizational goal. Human resource management has several roles to be fulfilled. The administrative role of Human Resource management involves clerical administration and recordkeeping. Another role of Human Resource management is operational and employee advocacy this involves managing Human Resource activities and serving as a mediator between the employee and employer. Human resource managers should contribute to organizational results by keeping organization and business ethics. Consequently managers at all levels must concern themselves with human resource management (Mondy, 2005). Whether employees are in a big company with 15,000 positions or a small non-profit agency with 15 positions the employees of that organization must be recruited, selected, trained, and managed. Human Resource Management
has four major tasks to be responsible for which are staffing policy, management training and development, performance appraisal, and compensation policy. These tasks can be complicated by differences between countries in labor markets, culture, legal, and economic systems. There are problems with citizens of one country working in another country thus leads to reasons for failure. Such failures are the inability to adjust; and family problems at home. The selection process of employees needs to be on technical expertise and cross-cultural expertise. These tasks can be complicated by differences between countries in labor markets, culture, legal, and economic systems.
There are problems with citizens of one country working in another country thus leads to reasons for failure. Such failures are the inability to adjust and family problems at home. The selection process of employees needs to be on technical expertise and cross-cultural expertise. The increasing international competition presents the need to manage human resources effectively to gain a competitive advantage in the global market. Businesses that choose to enter into this market must realize that all markets are not the same as in America. Rapid growth of international outsourcing also indicates the linkage between global competitiveness and HR management. A number of companies that operate in only one country have recognized the need to develop more global operations. (Roberts, 2006) Investing in international business differs in each country. The difference determines how the operation will be built. We have to understand the political and legal factors affecting international trade and how it relates to domestic and international practices. The political and legal factors can dictate the requirements such as training, compensation, hiring, firing, and layoffs. Globalization
Globalization of business has meant that more organizations tend to operate in multiple countries. There are a considerate amount of companies who don’t currently operate globally, but feel the need to develop a more global organization. When taking on the responsibility to become a global organization companies should take on a global mindset. Globalization is a profound shift for many organizations. The globalization of business has
shifted from trade and investment to the integration of global operations, management, and strategic alliances, which has significantly affected the management of human resources (Roberts, 2006). The world is a big marketplace versus a marketplace of boundaries. It is important that organizations look at Human Resource management issues from a global perspective. This requires that the company use ideas and resources of that culture in order to ensure an atmosphere of openness. Globally an organization must comply with the affects of ever changing tax, immigration, and other law regulations. Organizations should also maintain accurate reports of operations in all countries, ensure that all employees are treated fairly, address the difference between mature versus emerging markets, deal with labor costs, and continually focus on global financial crisis and its impact on the organization. Globalization influences organizations that compete for customers with high expectations for performance, quality, and cost. Globalization also exerts pressure on the human resource management function to adapt to changing organizational needs and add greater value. (Friedman, 2007)
Global Human Resource Management in different parts of the world is up against cross-cultural adaptation, different values, and management style. The challenges of the factors listed must be handled in order to do business globally. The political system varies from country to country. The American firms are used to having a stable political system. Our leaders change here in America, the legal system is pretty well established; therefore the international businesses can depend on consistency here in America. In other countries the legal and political systems are on a shaky ground because the country could be ran by a military militia or countries that are ruled by dictators who uses their power to their advantage. In some countries, laws address issues such as employment discrimination and sexual harassment. In other countries, because of religious or ethical differences, employment discrimination may be an accepted practice. It is very important for Human Resource Management to conduct a thorough review of political environment and employment related laws before beginning operations in a foreign country.
Political and legal factors bring about challenges to global human resource management while business owners are building on foreign territories. This is not a simple task. Most international businesses take a local approach to managing human resources. The pressure on local human resource management could develop policies that in turn could be inappropriate for the business and the employee on that foreign territory. There are many countries functioning under turbulent and diverse legal and political systems. As a result, Human Resource related laws vary in character and stability. Compliance with laws on wages, benefits, union relations, worker privacy, workplace safety, and others illustrate the importance of HR professionals to conduct a comprehensive review of the political environment and employment laws before beginning operations in a country (Roberts, 2006). Cultural Factors also represents another important concern affecting international Human Resource Management. Cultural differences bring about another concern affecting international human resource management. Culture is a collection of community forces affecting the values, beliefs, and actions of a distinct group of people. Cultural differences exist between nations and cultural differences also exist as it relates to religion or ethnicity in parts of the world. Convincing individuals from different religious, ethnic, or tribal backgrounds to work together in a global firm may be difficult in some parts of the world. There are many organizations that operate in the United States, Europe, and other countries are familiar to reasonably stable political and legal systems (Roberts, 2006).
On a global level organizations are likely to grow even larger. With the rise in globalization it has been increasingly hard for human resource management to ensure compliance with all relevant personnel related laws and regulations. In order to ensure that the rules and regulations many organizations have relied on international assignment programs. This type of program is set in place to ensure that no parts of the organizations are overlooked, undermanaged, or misunderstood. If these problems are not quickly resolved it can quickly lead to the damaging of company’s reputation andPolitical and legal factors bring about challenges to global human resource management while business owners are building on foreign
territories. This is not a simple task. Most international businesses take a local approach to managing human resources. The pressure on local human resource management could develop policies that in turn could be inappropriate for the business and the employee on that foreign territory. There are many countries functioning under turbulent and diverse legal and political systems. As a result, Human Resource related laws vary in character and stability. Compliance with laws on wages, benefits, union relations, worker privacy, workplace safety, and others illustrate the importance of HR professionals to conduct a comprehensive review of the political environment and employment laws before beginning operations in a country (Roberts, 2006). Cultural Factors also represents another important concern affecting international Human Resource Management. Cultural differences bring about another concern affecting international human resource management. Culture is a collection of community forces affecting the values, beliefs, and actions of a distinct group of people. Cultural differences exist between nations and cultural differences also exist as it relates to religion or ethnicity in parts of the world. Convincing individuals from different religious, ethnic, or tribal backgrounds to work together in a global firm may be difficult in some parts of the world. There are many organizations that operate in the United States, Europe, and other countries are familiar to reasonably stable political and legal systems (Roberts, 2006).
On a global level organizations are likely to grow even larger. With the rise in globalization it has been increasingly hard for human resource management to ensure compliance with all relevant personnel related laws and regulations. In order to ensure that the rules and regulations many organizations have relied on international assignment programs. This type of program is set in place to ensure that no parts of the organizations are overlooked, undermanaged, or misunderstood. If these problems are not quickly resolved it can quickly lead to the damaging of company’s reputation and brand. There are many countries functioning under the turbulent and diverse legal and political systems. As a result, human resource related laws vary in character and stability. Compliance with laws on wages, benefits, union relations, worker privacy, workplace safety, and others
illustrate the importance of human resource professionals to conduct a comprehensive review of the political environment and employment laws before beginning operations in a country (Roberts, 2006). Cultural factors also represent another important concern affecting international human resource management. Cultural differences bring about another concern affecting international resource management. Culture is a collection of community forces affecting the values, beliefs, and actions of a distinct group of people. Cultural differences exist between nations and cultural as it relates to religion, ethnic, or tribal backgrounds to work together in a global firm may be difficult in some parts of the world. There are many organizations that operate in the United States, Europe, and other countries that are familiar to reasonably stable political and legal systems. (Roberts, 2006)
On a global level, organizations are likely to grown even larger. With the increase in globalization, it has been increasingly hard for human resource management to ensure compliance with all relevant personnel related laws and regulations. In order to ensure that the rules and regulations are enforced, many organizations have relied on international assignment programs. This type of program is set in place to ensure that no parts of the organizations are overlooked, undermanaged, or misunderstood. If these problems are not quickly resolved, it can quickly lead to the destruction of the company’s reputation and brand.
There are Fortune 500 companies that do business internationally and have been quite successful in doing so thus far. International business is a growing and competitive environment. Walmart is the number one Fortune 500 Company in 2010 with revenues totaling $408,214 million and profits of $14,335 million (CNN Money, 2010) who uses global human resource management. Walmart became an international company in 1991. More than 75 percent of the international stores operate under a different banner than Walmart. Walmart serves in 14 countries outside the United States with a total of 4,068 stores and more than 664,000 associates.
Walmart works hard to help every associate feel fulfilled, motivated and
empowered while building his or her careers. Wal-Mart’s search for human resource management has a few objectives in mind such as looking for people who can lead and motivate others and who can understand the vital role that career opportunities play in improving lives. The corporate giant’s employment needs are diverse and always changing.
Walmart trains their human resource management staff on global human resource management. The objective of the course is to familiarize the employees with the latest global trends and different cultures, human resource management systems and policies. Management across borders requires global managerial staffing and cross-cultural decision-making. Walmart understands that people are the key to their business and the strategy is in place for human resource management and development.
There are employers seeking flexible and adaptable workers, the young and newly educated workforces in developing countries are particularly attractive. Thus, it is not surprising that many firms headquarters are in developed countries now have a large proportion of their workforce located elsewhere. For example: The Ford Motor Company has half of its employees outside the United States Philips Electronics has three-fourths of its employees working outside the Netherlands. More than half of Matsushita Electric’s staff work outside of Sweden Clearly there are many firms developing a global perspective is no longer an option. Organizational structures that reflect and support globalization are becoming a necessity, and the workforce to staff them mandatory. Human resource managers can aid their organization’s transition into the arena of more intense worldwide as well as domestic competition. (Schuler, 2010) DESIGN OF STUDY
This study is broad and informative. This design of a study was to help individuals understand the global factors associated with human resource management. As with any aspect of an organization there are certain guidelines and procedures that have to be followed. The role of international Human resource management professionals is coming to the forefront as firms continue to globalize at a rapid pace. Businesses have realized that without attention to foreign markets and competitors their
prosperity and survival may be at stake. Information and communication technologies are transforming organizational structures and business processes; it is also breaking down organizational and geographic boundaries. FINDINGS
During this research, the author discovered that many programs, industries, and popular business in the United States have a global business that is rapidly growing. With the data collected and read thoroughly the findings presented an array of evidence to support that there is a direct correlation between Human Resource management and issues that organizations face when deciding to expand globally. For businesses operating in more than one country it is vital for human resource professionals to understand the international context in which they work. This is more important today than ever before, as businesses and their HR teams face the reorganization demands driven by the current economic downturn and the challenges of applying these globally. Shifting from a local human resource management role to one that involves operating in a global scale presents all human resource professionals involved with an abundance of challenges. (Communicaid, 2010) Human resource management can include two large areas: personnel management and development functions. This paper attempts to shed light on development functions, which have tended to be somewhat disregarded in traditional public personnel administration and international public administration education. The primary objective is to answer some of the most critical questions regarding human resources in a global perspective. How can executives develop a multicultural management group? What role should human resources play in the management of negotiations and international collaboration? How can cross-cultural competencies best be developed? Globalization implies accepting that cultural diversity in management composition and management style contributes to the competitive advantage of the global agency. Also, effective globalization calls for the pursuit of a number of management approaches that, on paper, may seem contradictory, but that can truly be effective only through their simultaneous and balanced application. Global human resource management provides an organized framework for developing and managing people who are comfortable with the strategic and operational paradoxes embedded in global
organizations and who are capable of managing cultural diversity
SUMMARY OF RESULTS
The collection of this research was based on conducted to after all I have discussed about global organization, the importance of the personnel, human resource management and how it affects the society politically and legally. There are many aspects in the business industry that many individuals do not learn about and why and how it works. Many business industries do not really and truly understand the purpose of human resource management. Human resource management (HRM) is now the term most commonly used in academic circles to encompass the range of policies and practices used by ‘modern’ organizations in the management of employees. An organization’s HRM function focuses on the people side of management. It consists of practices that help the organization to deal effectively with its people during the various phases of the employment cycle, including pre-hire, staffing, and post-hire. The pre-hire phase involves planning practices. The organization must decide what types of job openings will exist in the upcoming period and determine the necessary qualifications for performing these jobs. During the hire phase, the organization selects its employees. Selection practices include recruiting applicants, assessing their qualifications, and ultimately selecting those who are deemed to be the most qualified. In the post-hire phase, the organization develops HRM practices for effectively managing people once they have “come through the door.” These practices are designed to maximize the performance and satisfaction levels of employees by providing them with the necessary knowledge and skills to perform their jobs and by creating conditions that will energize, direct, and facilitate employee’s efforts toward meeting the organization’s objectives. The collection of this research was based on all the author has discussed about global organization, the importance of personnel, human resource management, and how it affects the society politically, and legally. There are many aspects in the business industry that many individuals do not learn about and why and how it works. Many business industries do not really and truly understand the purpose of human resource management. Human resource management is now the term most commonly used in academic circles to encompass the range of policies and practices used by “modern” organizations
in the management of employees. CONCLUSION AND RECOMMENDATIONS
Managing human resources in different cultures, economies, and legal systems presents some challenges. However, when well done, HR management pays dividends .A seven-year study in Britain of over 100 foreign companies showed that good HR management, as well as other factors, accounted for more of the discrepancy in profitability and productivity than did technology, or research and expansion. The most common obstacles to effective HR management are cross-cultural adaptation, different organizational/workforce values, differences in management style, and management turnover. Doing business globally requires that adaptations be made to reflect these factors. It is crucial that such concerns be seen as unified by managers and professionals as they do business and establish operations globally. Human resource management will be a key focus area as companies put in place strategies to cope with the financial and economic crisis. In the past 10 years, human resources have spent much time re-inventing it in order to be better equipped to serve the business. (Lettink, 2009)
There was a case study involving retirement, global human resource management and service coordination: Global HR management and service coordination:
Unparalleled global service applied to address country-specific problems. Recognition of client’s global business needs drives success. Key Issues
A global manufacturing company needed a global actuary to manage its retirement and other employee benefit programs in key locations around the world. The company enjoyed an existing relationship with Watson Wyatt in the U.S. and Canada and was impressed by Watson Wyatt’s ability to field a team of experienced consultants around the world. Based on that team’s demonstrated ability to deliver service globally, the company selected Watson Wyatt to help provide innovative, global solutions to country-specific employee benefit design problems. The Approach
Watson Wyatt built on its international capabilities and benefit expertise in the aging workforce, retirement design and strategic rewards to meet the client’s global human resource management needs. Watson Wyatt consultants
became part of a global team – mirroring the company’s global operations – that maintained constant communications. The team relied on monthly meetings, discussion and review of all projects with team leaders, and effective tools including Watson Wyatt’s BenTRACKTm (global benefit tracking system) and a closed Internet site for the assignment. The Internet-based system provided the company with valuable country profiles and access to most correspondence from around the world. With this insider information, the team provided strategic employee benefit solutions to meet the company’s business needs in any location. In Mexico, for example, Watson Wyatt provided human resource support for an acquisition, addressing the corporation’s Mexican human resource issues, including a review and analysis of existing compensation and benefit programs. In close coordination with the client’s Mexican locations, Watson Wyatt produced a comprehensive report in English and Spanish that addressed Mexico’s particular needs. In Korea, the client turned to Watson Wyatt to help integrate two additional acquisitions in a timely manner. Watson Wyatt now has ongoing projects with the company in Brazil, Canada, Germany, Korea, Mexico, Netherlands, Sweden, France and the United Kingdom. The Results
Watson Wyatt’s global human resource management service enabled the client to redesign its employee retirement and other benefit programs to meet changing business and employee needs in locations around the world. By aligning its employee benefit programs with both global and local business needs, it boosted its performance in the global marketplace. (Watson, 2010). Recommendations
Overall, the author recommends the following:
1) Further studies need to be conducted on global human resource management. 2) Human resource management should be strengthened internationally in order to ensure laws and regulations are fully maintained by the organization. 3) In order to succeed globally, organizations should have leaders who have lived and worked in more than one country, speak various languages and are open and receptive to multicultural, ethnic and generational differences. 4) Increase access to telecommunications and decreasing the cost of telecommunications. Bibliography
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Cite this An Examination of Political and LEgal Factors Affecting Global Human Resource Management
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