The emerging strategies in international human resource: Balancing diversity in workforce with local market sensitivity and ensuring successful outsourcing.

Author: Iloka Benneth Chiemelie

Published: 28/11/2014

Introduction

As globalization is increasingly becoming a normative strategy for organizations, one of the important success factor is that need to amaze adequate number of competent manager and staffs in order to ensure global success (Martin and Beaumont, 1998; Lepak and Snell, 1999; Dowling et al., 1999; Harvey and Novicevic, 2002). In such environment, global human resource management gains higher importance on the success of firm while also becoming more complex with increased administration difficulty (Grant, 1996; Kamoche, 1997; Boxall and Purcell, 2000; Harvey and Novicevic, 2003). Thus, it becomes clear that organizations must develop mangers that have the right global mindset in terms of how they see the global marketplace (Kedia and Mukherji, 1999; Paul, 2000; Begley and Boyd, 2003). These managers also need to have a pluralistic management view that encourages and sustains multiple views in order to solve complex issues in the organization (Aguirre, 1997; Harvey et al., 1999; Reynolds, 1997). In the view of such understanding, this research paper seeks to highlight some of the emerging strategies in international human resource, how diversity in workforce can be balanced with local market sensitivity, and ways to ensure successful outsourcing.

Emerging strategies of international HR management / global staffs

Resource based view – this strategy is centered on effective and efficient bundling, utilization, and deployment of global organizational resources (Boyacigiller and Adler, 1991; Brewer, 1992; Daniels, 1991; Parkhe, 1993). In the HRM sense, it is of the view that global firm should have competence workforce capable of effectively and efficiently deploying its resources across the globe. For instance, a firm adopting resource based strategy to HRM (e.g. Nestle) normally have branches across the globe, production units and global managers that can deploy different strategies based on market needs and also ensure alignment of such strategies with company’s objectives.

Human capital based view – even when companies have global resources such as objectives, factories and operation units, the absence of right human capital can have detrimental effects on its chances for success (Amit and Shoemaker, 1993). The human capital based view is centered on recruiting employees that are competent in the course of their job undertakings and also equipping those employees with the right framework for ensure sustainability through training and development plans y (Adler and Ghadar, 1990; Kobrin, 1992; Milliman et al., 1991).

Basically, these two strategies standout as the main emerging strategies in international human resource management as well as the foundation for other strategies. This is because they define what the company has and how the company makes good use of what it has.

Balancing culturally diverse workforce and local market sensitivity

In order to ensure success of any global strategy it is important that the company understands the needs and cultures of the local market as well as align their business strategies with such (Adler and Ghadar, 1990; Kobrin, 1992; Milliman et al., 1991). One way of doing that is by adopting “think global, act local” view (Swanson, 1997, 1998; Ruona, 1999; Toracco, 1997; Jacobs, 1997) as pioneered by McDonald’s restaurants. Taking McDonald’s as an example, international companies need to have a global objectives, but also align their business operations with what is obtainable from their local market. For instance, McDonald’s has a global objective of increased profitability, but it also aligns such objective with their respective local markets by offering goods and services obtainable in each market. A good example is their act of selling vegetarian foods in India, pork burger in China and Chicken nuggets in the USA. Thus, the process of balancing diverse workforce with local cultures entails:

1.      Having a global view / objectives;

2.      Understanding the cultures of the local market;

3.      Understanding the needs of the local market;

4.      Educating the diverse workforce on cultures and needs of the local market; and

5.      Offering goods and services that are aligned with the needs and cultures of the local market based on global corporate objective.

Considerations to ensure successful outsourcing

In the wake of increased globalization, companies have shifted their production process to countries where their needed raw materials and cheap labor are in abundance (Kirkbride and Tang, 1992; Tayeb, 1988, 1995), and the main purpose for such is the need to increase profitability through lower production costs. However, outsourcing can be very difficult and failure is not lacking, making it necessary to consider numerous factors such as:

Availability of raw materials – the company need to ensure that raw materials for their production are available in their intended country to outsource their production process as lack of such will likely led to higher production cost.

Availability of required human capital – the company also needs to consider the availability of workforce and competence level in these workforce as lack of such can affect product quality and standard.

Stable political and legal system – this is also another issue that the company needs to consider because stability in political and legal system will create stability in policies for international outsourcing, while the lack of such can result to engulfing damages and losses to the company (both financial and otherwise).

Taking my SIX12 as an example, it is a Nigerian alcoholic drink but it outsourced its production to RITA foods and beverages in Vietnam. The main reason for their decision is because raw materials needed for production are in abundance in Vietnam and the country also has cheap labour. Thus, SIX12 is able to import its brands, make goods sales and profit, while also reducing production costs.

Conclusion

From the above discussions, international human resources has been highlighted as a common trends in the increasing global economy company that wishes to internationalize need to balance their corporate view with the cultures of their targeted local markets. Additionally, they need to ensure that needed human capital and raw materials are in abundance in their targeted country before making decision to internationalize.

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