Impact of Globalization on HRM

 

Introduction to Globalization

Background to Globalization: International Business evolved from the age of World War I (1919) & World War II (1939). The economies of several countries were down. Exports & imports were restricted due to unhealthy relations.  Then the world war countries found the need for international cooperation in global trade. This led to the formation of the IMF (International Monetary Fund) & World Bank. The attempt of these advanced countries ended with the GATT (General Agreement of Trade & Tariffs) & gradually GATT was replaced by WTO (World Trade Organization) in 1995.

Hence the efforts of the IMF, World Bank & WTO led to the globalization of business during the 1990s.

Globalization:

• Doing business in more than one country
• Operating and expanding the business throughout the world
• Establishing manufacturing and distribution facilities in any part of the world
• Global organizational structures, organizational culture & strategies

What Does Globalization in Human Resource Management Mean?

HRM is the practice of overseeing and managing the people who work within an organization. It involves hiring, training, compensation, and ensuring a positive work environment. 

Globalization, on the other hand, refers to the process of increased interconnectedness and integration among countries, economies, and cultures. 

When this concept is applied to HRM, it means that organizations are expanding their operations across borders, hiring talent from various parts of the world. Globalization in HRM involves adapting HR practices to suit international hiring, such as:

• Managing a global workforce,
• Dealing with cultural differences,
• Adhering to diverse employment and labor laws.

Pros & Cons of the organization

Impact of Globalization on HRM

As a result of globalization, many firms have begun to compete on a worldwide basis. This situation has led Human Resources Management (HRM) to gain more importance in the global arena and the “international HRM” field. Over the past few decades, international HRM has gained considerable attention from both academicians and practitioners. The increasing globalization of business has required organizations to manage their workforces effectively. Managing a foreign workforce can differ drastically from managing a domestic one. HRM in the international context requires managing diverse workforces originating from different nationalities with various cultures. Therefore, workforce diversity has become increasingly important for organizations that plan to expand into global markets and target different consumer groups. Organizations can adopt different approaches for managing their workforces and every function of HRM systems should be designed consistent with the workforce diversity of the organization. The purpose of this chapter is to investigate the concept of international HRM and diverse workforce in global organizations. Additionally, the importance

of managing diverse workforces effectively in global organizations in the context of HRM functions and the role of HRM in this process will be discussed briefly.  (Yasemin Bal, 2013)

Global HRM refers to Human Resource Management practices that deal with managing a diversity of workforce from all around the world.

The impact of globalization on HRM is as follows:

Managing Cultural Diversity: Managing different employees from different cultures in the same organization is a complex activity.

Managing Expatriates: Preparing the home country employees to work in a different country is a herculean task. The beliefs, value systems, culture, and attitudes are diverse in nature.

Difference in the Employment Laws: The employment laws or the labor laws differ from one country to another.

Managing Outsourcing of employees: Outsourced employees to manage business are the big impact of globalization

Managing virtual employees: Majority of the information technology-based organizations have employees working “on-site” at a client’s location which is completely new to them...

Corporate Social Responsibility: Corporate houses actively participating in the practice of doing for the betterment of society have emerged from the Western countries

Coping with flexible working hours: The practice of flexible working hours has emerged as one of the retention initiatives of the workforce, especially women employees who can maintain a work-life balance.

Coping up with emerging technologies & quality measures: Every employee in today’s leading organization is being trained with the latest technologies.

Changing perspective from subordinates to business partners: The shift has been observed in today’s MNC that the culture of subordinates is becoming extinct. Employees have been treated as business partners’ i.e., every employee is responsible for the growth of the organization and considered a partner in the company. This impact is the result of globalization. (SpiritOfHR, 2013)

 Challenges of Globalization in Human Resource Management

Here are the top challenges you might face due to globalization in HRM.

1. Virtual Team Management

Teams are spread across different destinations and time zones in a globalized workforce. This poses a challenge in coordinating tasks and maintaining effective communication. 

2. Talent Retention and Engagement

Global companies also face the challenge of retaining top talent in an environment where employees are exposed to various other opportunities worldwide. Especially when employees’ work expectations and personal goals

3. Training and Development Adaptation

Globalization in HRM demands continuously improving skills and knowledge. However, developing training and development programs for people belonging to different cultures and backgrounds can be challenging. Moreover, standardizing content while ensuring its relevance to local contexts requires careful planning. 

. Privacy and Security

With data being shared across borders, ensuring the privacy and security of sensitive employee information can be complicated. The responsibility for managing this data lies with the human resource department. In such cases, adhering to various data protection regulations and safeguards against breaches is essential. 

Balancing the need for information exchange with legal requirements poses another significant challenge. 

5. Global HR Strategy Alignment

Different regions may have varying labor laws, cultural norms, and business practices. Thus, human resource professionals need to create a unified, global human resources strategy that complies with labor laws and aligns with the company's global goals can be complex. 

‍What are the major areas of impact of globalization on human resource development?

The significant areas of impact of globalization on Human Resource Development include changes in recruitment practices and the increased emphasis on cross-cultural training and communication. Human Resource Development also includes the need for continuous skill development and the challenge of managing a diverse workforce.

 What is the globalization trend in human resource management in 2023?

The globalization trend in global human resource management practices in 2023 is characterized by adopting hybrid work models and utilizing metaverse technology for virtual workspaces.

(Patel, 2022)

HR Trends in Globalization

Globalization is causing businesses to rethink their human resources strategies. Organizations can now recruit employees from all around the world and subsequently can sell products and services across geographic and cultural boundaries. The effects of globalization on HR have initiated several trends in the workplace.

International Recruitment and Hiring

Globalization allows businesses to recruit and hire employees from all around the world. This is particularly attractive to smaller businesses who, while may not be able to have more than a few employees, can fill their available positions with the very best talent, even if that talent doesn't live locally. The HR trend of international recruitment and hiring is focused on bringing diversity to the organization and it recognizes that employees from abroad may be able to provide unique perspectives on customer service, marketing, and sales, among other areas of the business.

Introduction of social media

Social media and mobile technologies are a hot trend in HR globalization. Social and mobile tech enables HR to expand its services by more easily and rapidly communicating with employees. If the office will be closed for inclement weather, for instance, HR can send social media messages to let employees know as opposed to using a phone tree. Social and mobile tech also helps HR to increase the value of the company by providing the business with employees who are tech-savvy and eager to embrace new ways of doing business

Professional Development

Professional development training programs have also arisen as a trend in response to global compensation approaches. Professional development is about providing employees with opportunities for growth outside the day-to-day routine of the organization. For example, HR might send employees to training seminars to sharpen their IT skills for use in global social media campaigns, or customer service personnel might be sent to language courses to enhance their ability to communicate with customers who live abroad. Such professional development programs keep employees motivated and feeling rewarded, and the new skills these employees learn are put to direct use within the company.  (Bradley, 2023)

CONCLUSION

When a business expands its operation into other countries, the impact of globalization on human resource development and management is significant. Companies need to consider a diverse range of practical adjustments to be able to hire, train, retain, and support a workforce that's often spread throughout several countries and often has varying cultural identities. Human Resources departments must adapt their thinking and practices to include cultural differences, foreign regulations, and technological developments.  

The increased internationalization of business in recent years has made the understanding of HRM problems more critical for executives in multinational companies. Differences in cultures, and economic and legal systems influence employer HR practices from country to country. The global HR challenge consists of how to effectively attract, engage, and retain thousands of MNE employees in many different countries to achieve strategic objectives. This goal not only includes engaging employees in different countries of the MNE, but also the role and importance of globally mobile employees such as expatriates and short-term international assignees. Additionally, aligning core HR processes and activities with the new requirements of competing globally while simultaneously responding to local issues and requirements is another challenge for IHRM.

References

Bradley, J., 2023. CHRON. [Online]
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Natter, E., 2020. chron. [Online]
Available at: https://smallbusiness.chron.com/effects-globalization-human-resources-management-61611.html
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Patel, S., 2022. Skuad. [Online]
Available at: https://www.skuad.io/blog/the-impact-of-globalization-on-human-resource-management
[Accessed 20 Oct 2023].

SpiritOfHR, 2013. GLOBALISATION & HRM. [Online]
[Accessed 20 Oct 2023].

Yasemin Bal, S. B., 2013. Globalization and Human Resources Management: Managing the Diverse Workforce in Global Organizations. [Online]
Available at: https://www.igi-global.com/chapter/globalization-human-resources-management/76481
[Accessed 20 Oct 2023].