Effects of Globalization on HRM Dissertation –Literature Review

This is the second part of Effects of Globalization on HRM Dissertation, in this part HRM Dissertation literature review has been prepared.

Literature Review

2.1 Globalization Process and Human Resource Management

We will start the discussion with the model of International Human Resource Management which is intrinsically related to the topic at hand does show the functional activities of a human resource management department of a firm which is dealing with the globalization processes.

models for international HRM

Usually, human resource management refers to the functions done by a company to efficiently make the most of its human resources. These functions would include at least the following:

  • Human resource planning
  • Staffing
  • Performance management
  • Training and development
  • Compensation and Benefits
  • Labor relations

Figure 1 (Morgan, 1986) shows these works in accordance with the international human resource management. It has been said by various past researchers and practitioners, namely Lewin and Volberda have said in the year of 2003 that the current trend of globalization is in its process now and is not over yet. They are also of the opinion that the end result and the form of this particular process is not very easy to forecast at this point of time.  It can be very hard to understand the depth and range of such a process which is shaping its path on a worldwide basis. Only a handful of global organizations, it has been said by the academicians, are actually believed to have made an efficient as well as effective capacity for establishing, supplying and handling human resources at any geographically disperse place in the world. Especially in the days when different global business entities specially the multinational companies still possess their assets, sales, possession of the human resource pool and have power over all these very important factors focussed highly on their domestic market or home regions (Rugman and Verbeke, 2004).

The remark made by Ferner and Quintanilla in the year of 1998, that the companies which are not located in particular states perform their operations globally irrespective of the borders of different nations under the international regulations of economics competition are applicable to very few of all the global companies can still be found true if a study is done today. In spite of the fact that significant processes related to the act of globalisation is going on in different major companies, with as much as 63,000 transnational enterprises taking the process of globalized business outlines to the next stage help in accumulates around 66 per cent of the total amount of trade done on a worldwide basis. But according to an UNCTAD report which was published recently in the year of 2007, the top 100 of the above mentioned business entities are responsible for more than 14 per cent of the total worldwide sales, 12 per cent of the total multinational assets and 13 per cent of the total global employment. It is imperative for the study to appreciate how does this process of globalization influences different key functions related to the human resource management processes in the enterprises. In the previous research works related to the factors of globalization as well as the human resource management, several famous frameworks have been used. All of these theoretical frameworks helped in forming several types of perceptions about the fact that how sophisticated or all encompassing the particular process is and the level of the globalizations effect on the different policies and practices regarding the process of human resource management.

The five most important literary works which have been able to generate this ideas and understandings are as follows:

  1. Comparative analysis of national business and management systems (Pieper, 1990; Whitley, 1992, 2000; Brewster, Tregaskis, Hegewisch, and Mayne, 1996) which itself can have different embedded levels of analysis from business system down to specific HR practices (Brewster, 2007);
  2. Processes of functional realignment taking place in response to globalisation (Malbright, 1995; Kim, Park and Prescott, 2003; Sparrow, Brewster and Harris, 2004; Brewster, Sparrow and Harris, 2005).
  3. The progressive building of international capabilities within organisations (Hamel and Prahalad, 1985; Prahalad and Doz, 1987; Yip, 1992; Dunning, 1993; Ashkenas, Ulrich, Jick and Kerr, 1995; Caves, 1996; Stonehouse, Hamill, Campbell and Purdie, 2000; De Saá-Pérez and García-Falcón, 2002;);
  4. The globalisation of industries (Bartlett and Ghoshal, 1989; Morrison and Roth, 1992; Makhija, Kim, Williamson, 1997);
  5. Relative levels of internalisation of the firm (Sullivan, 1994; Ramaswamy, Kroeck and Renforth, 1996; Sullivan, 1996).

2.2 Effect of Globalization on Human Resource Management

Let us start the discussion with the theoretical framework of the human resource management.

Theoretical framework for HRM Dissertation Literature Review
Theoretical Framework for Human Resource Management

This particular figure gives us the basic understanding of the factors which have a great deal of influence on the functions of a human resource manager. The functions of a human resource manager must correspond to the changing requirements of a company which is evolving. Booming companies and their human resource department are becoming more flexible; customer centred and can change their direction quickly. Contained by this setting, the human resource managers have to understand the ways to manage efficiently with the help of different processes like planning, arranging, guiding and managing the human resource of the organization and have a well informed view of the rising developments in recruitment and employee development. (Brewster, Sparrow and Harris, 2005) Almost all of the developments with respect to the literature works and theoretical frameworks on the topic of human resource management and its key practises like recruitment and selection strategy have based themselves their focus on the analyses of the third and fourth levels (Schuler and Tarique, 2007). Most of the previous research works on the topic of functional realignment within the business entities who have adapted to the globalization practises examines the driving forces within the business functions of that particular enterprise as they try to synchronize (implement connections between the functions of which the units are geographically distant from each other) and have power over (make conformation in the most important activities to alter them with respect to the expected targets which have already been set) their actions beyond the boundaries of different nations (Kim, Park and Prescott, 2003). Malbright in his book which was published in the year of 1995 have opined that the purest form of globalisation takes place at the functional level of the practise by an organization, not at the organizational level. Hence it is imperative for us to identify and appreciate the ways in which different business entities improve their capability in terms of certain particular actions which they need to perform in a world wide scale. Some latest empirical studies which have been carried out on the topic of these particular influencers which are prevalent on the various functional activities of human resources like recruitment and selection as well as talent acquiring and employee selection processes, have been able to identify and analyse five most important factors which are proving as the cornerstone of the process of globalization in most of the organizations. All of these factors are connected with diverse blends of these following factors: competence; exchange of information through which a well established organisational learning process can be maintained; international stipulations; gradual convergence of the processes which are at the very core of the business; and localization (Brewster, Sparrow and Harris, 2005).

2.3 Changing Phase of International Human resource Management

The potential accomplishment of any company depends on the skill for managing a varied talent pool which will be able to bring in new developments in the business scenario and novel perspectives to the work they are doing in the company. The troubles faced of workplace variety can easily be transformed into an asset which is strategically important to the company if that company can take advantage of the pool of various talents which they have got through the help of globalized recruitment and selection. With the mix of a group of people who are talented and hail from different cultural backdrops, genders, ages and lifestyles, an organization can respond to business opportunities more rapidly and creatively. (Millar and salt, 2006) More importantly, if the organizational environment does not support diversity broadly, one risks losing talent to competitors. This proves to be very correct for transnational organizations that have operations on a global scale and employ people of different countries, ethical and cultural backgrounds. The necessity for competence has been able to generate the search of three most important mechanisms for the purpose of delivering of the global human resource management. These are a centre of attention on the point of collective service arrangements, the revolutions which information technology and especially internet has been able to bring to the most of the functional aspects of human resource practise on a local as well as an international scale, and the search for centres of excellence which are present for the company throughout the world. This international realignment of the practises has widespread implications for the particular wing of international human resource management. Traditionally, it was generally the responsibility of the persons who dealt with the managers who used to work for the company in some other nations, with most of the concentration provided for the purpose of understanding the certain set of expertise and skills which were really imperative to possess as an efficient as well as effective global manager. But this days the focal point has changed its course to the requirement of not only implementation of a different department which deals with the international functions of human resource management with the help of managers who are entrusted with this task only, but to globalise all of the most important functions related to the field of the human resource management processes of a particular business entity. Processes related to human resource management these days are being implemented for the benefits of the workers who have became much more different in terms of origin and ethnicity and very global in terms of their operating countries. The most predominant challenge of this whole process is to make sure that that the human resource management professionals, who in spite of the fact that they operate in a local set up which is predefined by the company, has to take care of human resource management functionalities which are amply capable of making its mark in an operational environment which runs across cultures and varied workforce markets. This particular study will try to identify and then analyse the ways the human resource management professional can cope up with these specific challenges especially in the field of recruitment and selection. The study reported on here addresses five research questions:

  1. What are the major effects of globalization on HRM?
  2. What are the common approaches HR strategies in adopting to cope with the above challenges?
  3. What ways can HR professionals to help organizations cope with the challenge in particular recruitment and selection strategy to be effective?
  4. Particularly what recruitment and selection strategy and practises tend to be effective?
  5. What might be the new directions and practises which may have in HR?

2.4 Global Recruitment and Selection Strategy

The work on the topic of global recruitment and selection strategy as part of the human resource management practises has previously been generally focussed on the topic of managing most important positions within the scope of a multinational enterprises and the management positions who are at the highest echelon of the organization pyramid and are located at the head quarter of the company and additional locations, most usually with particular blends of strategy and not any rational development of concentration with respect to the globalization process (Harzing, 2001, 2004). The previous theoretical works has been most attentive on the process of and the factors involving the recruitment and selection of expatriates and global professional, management of talent at the head quarter as well as domestic level, and an increased flexibility with the case of the business travellers who always travel within the geographically disperse business units and inpatriates (Scullion and Collings (2006). Nevertheless, the famous academicians, Briscoe and Schuler (2004, p. 223) have identified the way in which global professionals continues to grow inside the scope of the particular company “… the tradition of referring to all international employees as expatriates – or even international assignees – falls short of the need for international HR practitioners to understand the options available…and fit them to evolving international business strategies”. With respect to the topic of globalization and the recruitment and selection in such environment, we can say that this these days comprises of a group of personnel which is very fragmented. These groups generally  comprises of expatriate who are on contract  with the company (Baruch and Altman, 2002); people who have been hired on a basis of short term or intermediate term and have been given locations in some foreign countries (Morley and Heraty, 2004; Mayerhofer, Hartmann and Herbert, 2004); stable cadres of international professionals (Suutari, 2003); global travellers (Economist, 2006); persons who are only used for certain business trips on a basis of long-term (Mayerhofer, Hartmann, Michelitsch- Riedl and Kollinger, 2004); global transferees who generally are transferred from a particular subsidiary to another one within a course of time (Harvey, Price, Speier and Novicevic, 1999; Millar and Salt, 2006); global professionals who work as a part of the project teams which are generally cross-border (Janssens and Brett, 2006); accomplished persons who operate in centres of excellence which are geographically remote and helps in the cause of international business cause for the company (Sparrow, 2005); self-instigated travellers who are staying in third country but are interested in working for an enterprise which has its operations in several other countries (Tharenou, 2003); settlers who are drawn towards the global labour market (Millar and salt, 2006); and locally based workers in a particular service centre, but looking after clienteles from some other nations , suppliers and partners on a regular basis.

Millar and Salt in their study conducted in the year of 2006 have raised the discussion with respect to various factors which have been instrumental in giving rise to increasing amount of demand for new types of global mobility: the necessity for the competent base of expatriates who will play a vital role in the process of formation of fresh global markets (Findlay, Li, Jowett and Skeldon, 2000); impermanent and short term usage of specifically competent persons who may be sent to different nations due to their important role in assisting the effective and efficient implementation of foreign projects (Minbaeva and Michailova, 2004; Hocking, Brown and Harzing, 2004); and the requirement for very mobile top managers who will be instrumental in performing roles which will expand the boundary of the company and will form social networks in the foreign country which eventually will help the process of  exchanging the business know how (Tushman and Scanlan, 2005). Apart from this particular process of making divisions, the chances for a much broader plan for resourcing has improved strikingly in some particular markets of labour which have globalised by themselves only (Ward, 2004). Substantial concentration has also been focussed towards different examples. One of them is globalization of the industry related to the healthcare (Aiken, Buchan, Sochalski, Nichols and Powell, 2004; Clark, Stewart and Clark, 2006; Kingma, 2006; Oberoi and Lin, 2006). It can be identified that the global selection and recruitment processes in many globalised firms and their human resource management departments have shifted its course from the conventional point of focus for it which was taking care of the base of expatriates. Apart from that, the ever evolving formation and function of human resource management department, which deals with international processes as well, signifies the fact that it is the time that these particular operations and their human resource managers should start helping their enterprises in taking care of a widely diverse selection of options which are attached to the function of international recruiting and selecting (Hustad and Munkvold, 2005; Sparrow, 2006). Companies these days are facing the problem of giving a certain amount of uniformity with the help of the processes related to optimising or standardising of operations throughout the globe with the driving logic of using the same machineries and strategies for acquiring talents in a global scene who are instrumental in being a part of an increased international community.

2.5 Global Management Staffing Strategy

The companies are also facing challenges in terms of sustaining approaches which have to be domestically responsive as well as differentiated in its international nature (Wiechmann, Ryan and Hemingway, 2003). Harvey, Novicevic and Speier, (2000, p. 382-382) argued that many firms had not yet internalised the influence of global markets and that “what is needed is a global management staffing strategy that enables global consistency among various managerial pools and the foreign subsidiaries” concluding that the proper integration of a transcultural emphasis in global staffing systems would be an intriguing future research topic. In order to ensure that the correct balance of standardisation versus differentiation is reached, geographical partners have to be treated as equal partners in the ensuing debate. Often it is the local in-country human resource business partner who has to manage these tensions. Consequently, research has to give attention to the role of local human resource business partners in this process of interpretation and negotiation. Thus, a human resource manager has to be very wary of the situation and it is imperative for him to implement a strategy of ‘Think Global, Act Local’ in almost all of the cases.

See the introduction of Effects of Globalization on HRM Dissertation

2.6 Chapter Summary

It is possible for us to gather form the literature review the way the globalization has been effective in influencing the human resource management activities and its key practises like recruiting and selection. It is also possible to understand are the common approaches which are taken by the human resource management department of an organization to cope with the challenges which have been posed by the effect of globalization. With all these fundamental theoretical understandings in mind it will be possible to throw some light on the topic of how human resource managers have tried to deal with these problems specifically in the field of recruitment and selection.

This particular literature review was hugely useful in generating new suggestions regarding the particular topic this study tries to address. The most important rationale behind doing a literature review is to revise the knowledge base which will act as an important instrument for the researcher while analyzing the topic. This has been instrumental in defining the basis for this research.