The recent financial meltdown has been a huge challenge to the business World across the globe. Globalization today is a representative of how the world is today that is characterized by free movement of human resource, flow of information technology and mass media. Globalization comes with it new challenges in regards to introduction of competitive environment for doing business. This paper attempts to focus on how globalization affects global human resource management with business organization going global. The paper will address what organizations need to address in this new dispensation.
The Key Elements of Globalization and Human Resource
With the onset of globalization in the 21st century, there have been some challenges that the human resource management has faced, especially in business organizations that operate as multinational corporations or as global enterprises. In the global operation of companies, free flow of financial resources, as well as human resource is experienced in the well developed nations, like those in the European Union (EU), Economic Community of West African States (ECOWAS), North American Free Trade Agreement (NAFTA) and other global trading blocs across the globe (Snell and Bohlander, 2010). These trade blocs have been instrumental in opening up new markets more that has ever been experienced in the past.
With the opening up of new markets across the globe, it has accentuated the importance of effective human resource management so that a company has a better competitive advantage in the global business arena. In order to achieve this, it is crucial for a company to understand the important factors that work in determining how effective certain human resource approaches and practices are. Nations where the company is doing business will differ in a number of aspects which act as influencers of direct investment from foreign nations for every country. The different aspects have an impact on how a company shall build an operation in a foreign country, and this will also have a direct impact on human resource management in that company. Some of the factors that will affect the global human resource management in the global market include the nations’ legal and political framework, the human capital, culture of the host people and the nations’ economic system.
According to Mangaraj (2008), the host nations’ human capital will represent the skills, competency, as well as how capable the workforce is. A workforce of a nation that is competent will provide the competitive advantage to a company, as the company will be able deliver quality and efficient products and services. For developing nations, globalization creates a certain challenges to the nations’ governments, labor market, as well as the private sector. Some of the challenges that have a strategic impact to the human resource management of these nations’ include: increase in fraud, especially where e-commerce is involved, implementation of the recovery plan, as well as nation’s growth agenda with the nations’ circumstances, challenges of the entrance of the international global companies and their effects on the local small companies, and, finally, the partnership of the economic recovery between the global company and the nations’ plans.
In the global environment, an organization will need to employ strategic human resource management which will involve a number of policies and practices that are created as well as implemented in order to ensure that an organization’s employees make a contribution to the achievement of the organization’s goals and objectives. Strategic human resource management is a practice that is proactive, has a macro orientation, as well as a long term focus. This strategy will view the human resource as an investment or an asset. The human resource management will be managed and aligned to focus on the better performance of the organization by using their energy on achieving the organization’s objectives.
As nations’ and corporate bodies engage with the challenges posed by globalization, a lot of developing nations must upgrade or change their human resource practices so as to conform to those of developed nations. They also need to upgrade their business competency, as well as workforce development to meet the international demands. Creation of distinct competencies among the labor force and important business partnerships with other nations is crucial. A nation also has to keep up with the changes in technology as far as human resource is concerned, as well as implementation on prescriptions necessary for recovery and economic development of the host country.
Globalization is a representation of a business environment that is better characterized with the flow of technology and human resources across boundaries. It also involves encounters with diverse information technology, as well as interaction with foreign media that presents the changes in the environment, as well as a new competitive environment for any business. A nations’ culture in regards to human resource will be trough globalization that became a strategic business issue that needs to be managed when encountered by a certain business (Ulrich, 1997). The challenge to a business is balancing the human resource management with cultural aspects present in a given nation.
Some of the key elements as far as managing human resource in a globalization environment include management of a workforce that is very diverse. A global company hires staff from very diverse nationalities, as well as backgrounds, thus, managing all this diversity may be a challenge to the human resource management. Other factors are also important in a global business environment, including managing strategy, human resource planning and ethics across borders. The expansion of organizations across borders will require the organizations human resource department to perform strategic partnership with their companies (Sparrow, Brewster and Harris, 2004).
The human resource has to ensure that they overcome the barriers that may arise with the growth of the organization in new geographical boundaries; these may include differences in culture. The human resource management has to ensure that they achieve the strategy of the organization by having the right people undertaking important responsibilities. In addition, human resource management has to ensure that staffs are well trained to enable them to better understand the organization in all aspects. An organization to reap from the global business environment cannot have to learn how to venture into new markets.