Challenges faced by human resource managers in the era of gloablization

Written by Bharti Venkatesh  

HR today is playing a lead role along with business functions in creating the necessary momentum and internal capabilities.

Now first let us understand what we mean by globalization.

What is globilzation?

Every day we hear it on news, we read it in the newspapers, we overhear people talking about it… and in every single moment the word ‘globalization’ seems to have a different meaning. So what is globalization?

“…integration of business activities across geographical and organizational boundaries.”

“The capacity to treat the world as one market while…dealing with many culturally diverse merchants.”

“…the process by which markets expands to include competitors for customers and productive inputs without regard to national boundaries”.

“…doing business with a world wide focus… rather than doing business in an international market with the focus from a home-country viewpoint.”

Globalization is not just a recent phenomenon. Some analysts have argued that the world economy was just a globalized 100 years ago as it is today. Yet the term is used since the 1980’s, reflecting technological advances that have made it easier and quicker to complete international transactions, both trade and financial flows. The most striking aspect of this has been the integration of financial markets made possible by modern electronic communication.

At a political and economic level, globalization is the process of denationalization of markets, politics and legal systems i.e. the use of the so-called global economy. Globalization refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity (village markets, urban industries, or financial centers). It means that world trade and financial markets are becoming more integrated.

At a business level, we talk of globalization when organization decides to take part in the emerging global economy and establish themselves in foreign markets. First they will adapt their products or services to the customer’s linguistic and cultural requirements. Then, they might take advantage of the internet revolution and establish a virtual presence on the international market place with a multilingual corporate website or even as an e-business.

Overall, globalization requires a combination of linguistic, engineering and marketing knowledge that is not easily available. (Sparrow, Paul, R, 2006)

Globalization is linked to four major aspects:

1. Trade
2. Capital movements
3. Movement of people
4. Spread of knowledge

Drivers of globalization

Driving factors of globalization can be divided into four groups:

Market drivers

• Convergence of per capita income
• Convergence of life styles
• Organizations behavior as global customers

Cost drivers

• Push for economics of scale
• Advances in transportation
• Emergence of newly industrialized countries with productive capability and low labor costs

Competitive drivers

• Growth of global networks making countries interdependent
• Rise of new competitors intent on becoming global competitors
• Increased formation of global strategies alliances

Goverment drivers

• Reduction on tariffs and other trade barriers
• Privatization of industry in many parts of the world
• Creation of trading blocks (i.e. EU)

Globalization has elevated the importance of HRM development in organization. These changes have led to the notion of the HR system as a strategic asset. Many of the arguments about processes of globalization within the HR function rest on the assumption that there has and continues to be longitudinal change in the conduct of HR. in the intervening seven years a wide range of contextual changes have led to significant globalization of activity, including: the transfer of work abroad, either to outsourced providers or on a global in-sourcing basis; the e-enablement of many HR process; greater sophistication in the HR information technology, new structures for international HR functions; greater competition for talented staff at all levels of organization; more protracted and strategic talent pipelines. In particular, there has been a very strong marketing, corporate communication and IT influence on the HR function. The HR function is realigning itself in response to this process of cross-function globalization (building new alliances with these functions) creating new activity streams and new roles and skills required of the HR function (Sparrow, Brewster and Harris, 2004).

Human resource managers: their role in a changing environment

Issues facing HR are expected to change dramatically in the next decades. Thus, HR professionals must play special roles in dealing with these changes and must develop specific competencies to support these roles.

Workplace flexibility is expected to be on the rise as the future workplace, the ‘virtual office’ is characterized by creative and flexible work arrangements. As more employees work off-site-up to two thirds of an organization in the 21st century – there will be an increase in emphasis on performance and results as opposed to the number of hours worked. In addition, off-site employees can expect to attend fewer meetings. Specified work will become much more collaborative and management will spend nearly all its time managing cross-functional work teams who enjoy a lot of autonomy. In essence, there will be a movement, a trend towards a decentralized model of HR.

HR managers will have to accommodate employees in their virtual work locations and find ways to manage corporate culture, socialization and employee orientation. In order to obtain and maintain a competent workforce, they must act as organizational performance experts and shape employees behavior without face to face meetings.

Another expected change in HR is the ‘Global Business’ concept world trade knew a major growth during the last years and there is forecasted as well the growth of international businesses, especially among small firms. Organization rely more and more organization HR specialists as the facilitators of work across borders and among different cultures. Therefore, they must be knowledgeable of other cultures, languages and business practices. They will be required to develop and manage an international workforce, maintain written and unwritten corporate polices for transportability to other cultures, keep top management informed of the costs of not paying attention to the transnational issues and provide their services to a variety of locations world wide.

Concerning the recruitment in the above mentioned ‘global business’ it will be important which strategy will be adopted by the management.