The core concept of this assignment is to evaluate the importance of the HR theories and the best practices to meet the organizational as well as the individual goals in order to maximize the performance of a multinational company. In order to reach such performance level, HR specialists are facing many challenges today. If the best HR practices relating to recruitment, selection, training and development together with range of organizational behaviours, HR tools (such as performance management, recruitment and strategies) are not managed well, the impact on staff retention, motivation and empowerment will be adverse. Because, in reality without a motivated and engaged workforce, whatever the best HRM practices used you can't generate a high performing culture. Therefore the importance of employee engagement is a vital factor in a high performance culture within the workplace.
History, From Personal Management to HRM
Over the past century, Evolution of human resources began during the end of the 18th century, where the industrial revolution took place. Its creation was based upon the reaction to the harshness of industrial conditions. Welfare tradition was the first form HRM and in 1833 the factories act stated that there should be male factory inspectors, its first act came into effect in 1878 which was to regulate the hours of work for children and women by having a 60 hour week. Industrial relations really started when trade unions where legalized in the U.K back in 1871, industrial relations came to the fore front during world war and this meant that personnel departments became responsible for its organization and administration. Bureaucracy arose from the increase growth or change of any given company the era is still alive and well in the modern day workforce simply put the gender pay gap is still a deeply seated complex problem in the modern day company but can be monitored nowadays by performance appraisals.
HRM nowadays has become more a key part of any company in modern business the HRM function is complex and as such has resulted in the formation of HRM/divisions in companies to handle this function. The HR function has become a wholly integrated part of the total corporate strategy. This function is diverse and covers many areas including Manpower planning, recruitment and selection, employee motivation, performance monitoring and appraisal, industrial relations, provision management of employee benefits and employee education training and development.
Changes happening in HRM
Marchington and Wilkinson (2008), defines HRM curtly as the management of employment definition of HRM but distinguishes between 'soft' and 'hard' versions of it. These writers, drawing upon Guest (1987) and Storey (1992), claim soft HRM 'recognizes employees as a resource worth investing in, and tends to focus on high commitment/high involvement human resource practices.' Hard HRM 'identifies employees as a cost to be minimised, and tends to focus on "flexibility techniques" and limited investment in learning and development' (Beardwell and Claydon 2007, pp671, 675). Boxall and Purcell (2008) regard HRM in the world as all those activities associated with the management of employment relationships in the firm.
Torrington et al (2008, p6), explained the term HRM in two ways. The first was used to describe the management activities which have been named 'personnel management'. The second is regarded as a distinctive approach to HRM and suggests a specific philosophy towards carrying out 'people-oriented organisational activities'. Personnel management seeks to achieve four key objectives: staffing, performance, change-management and administration. These organisational objectives are delivered by HR specialists or by HR generalists. The distinctive approach to managing people delivers organisational objectives by HR professionals with the support of line managers.
Torrington et al (2008) describe the evolution of personnel management and HRM in the UK as 'social justice'. In nineteenth-century this originated amongst a few employers in Britain and they promoted a welfare approach to manage people by developing working conditions and avoiding poor industrial relations. Further, in the first half of the twentieth century, 'humane bureaucracy' was introduced by managerial practitioners such as Taylor (1911), Fayol (1916) and Mayo (1933) came to the front in management practices. Taylor's 'scientific management' principles introduced an incentive-based approach to managing people by having good human relations, high morale and efficiency at as described by Mayo (1933). Thereafter a period of 'negotiated consent' was stressed by personnel and industrial relations managers due to strong trade unions activities in 1960's. The aim was to contain the union power and manage people by representative systems and collective agreements.
From the late 1960s, main target was on the organization by deploying personnel specialists. It was done by developing career opportunities and creating a path for workers to grow personally and by workforce planning. Currently the theme 'HRM', focused mainly on performance management, planning, monitoring and control, flexibility and employees as individuals, had a vast improvement in world during 1980-2000.
Further lot of developments are taking place within the HR community and HR work in recent years. Lot of large organisations are adopting variants of Ulrich's (1997) multi-legged model of HR structures, without going for centralised HR departments as it was in the past. Due to this HR functions have becoming more specialised function and it's divided into parts between shared services, business partners, centres of expertise and vendor management , managed by The corporate HR.
Development in HR is continuing as some HR activities are delegated of to line managers. It includes recruitment, selection, salary and reward, coaching, learning and development, performance management, grievances and discipline, but the sad part of it is that some of the line managers have skills gaps in people management and development activities, therefore implementing of HR policies effectively has become very difficult.
Importance of HRM in an Organisation
Becker and Huselid (2006) also believe that there has been a 'noticeable departure' (Becker & Huselid, 2006:899) as managers within organizations are either 'unaware or uninterested in scholarly developments in our field' (Becker & Huselid, 2006:899). Contributing to this, Becker and Gerhart (1996) illustrate that there is a significant level of ambiguity within the field of HRM as it has different connotations for academics and HR professionals (Becker & Gerhart 1996:782). To eradicate this, better communication is needed between 'the academic and managerial communities so that research findings can have a greater influence on actual policy' (Becker & Gerhart 1996:796). Despite the current disparity between theory and practice, the importance of HRM in developing a successful performance culture is becoming very important as more organizations recognise that implementing HR as a strategic partner can 'contribute directly to the implementation of the operating and strategic objectives of firms' (Becker & Gerhart 1996).`As Wright, Dunford and Snell (2001) explained, the 'advent of the sub field of strategic human resource management, devoted to exploring HR's role in supporting business strategy, has provided one avenue for demonstrating HR value to the firm' (Wright, Dunford & Snell, 2001: 702). Consequently, the prominence of SHRM has boosted the profile of HR within organizations and illustrated that it can generate 'sustained competitive advantage' (Becker & Gerhart, 1996:781. Becker and Huselid (2006) believe that strategy relates to 'building a sustainable competitive advantage that in turn creates above the average financial performance' (Becker & Huselid, 2006:899). The general consensus is that human, not financial capital 'must be the starting and ongoing foundation of a successful strategy' (Bartlett & Ghoshal 2002:34) and therefore, it is the human capital of the organisation that creates sustained competitive advantage. However, this interpretation is challenged by Thompson (2011) who states that 'labour may be an asset with value, but talk of 'people are our most important asset' (Thompson p 363 2011). Nonetheless, the view that it is the employees of an organisation that contribute to generating competitive advantage is also supported by Pfeffer (1994), Wright, Dunford and Snell (2001) and Becker and Gerhart (1996) amongst others. This theory is known as the resource based view of the firm and has been developed by Barney (1986, 1991, and 1995).
The resource based view of the firm demonstrates that firms can 'develop sustained competitive advantage only by creating value in a way that is rare and difficult for competitors to imitate' (Becker & Gerhart, 1996: 781). Complementing the RBV of the firm is the development of a set of best practices that are used interchangeably within organisations. There are many perceived best practices, but Jeffrey Pfeffer's (1994) seven best practices are well known and acknowledged and include security of employment, selective hiring of new personnel, high compensation relative to organisational performance and extensive training amongst others. The rationale for adopting a set of best practices is that it will contribute to developing a high performance culture for both the individual and the organisation. Also even within the best practice approach, 'researchers have much to learn about what constitutes a high performing HR strategy' (Becker & Gerhart, 1996: 784). Once again, as aforementioned with the term HRM, best practices are not universally accepted and recognised, and thus, terms like best practice may have different implications for managers and for researchers (Becker and Gerhart, 1996, 786).
In addition to this, one needs to be careful not to assume that 'HR strategies are uniform within firms' (Boxall & Purcell, 2000: 186). This relates to the 'best fit' school of thought, as it argues that HR strategy will 'be more effective when it is appropriately integrated with its specific organisational and environmental context' (Boxall and Purcell, 2000: 186).
Positive Differences to the Organisational performance
The security of employment and the selective hiring of new personnel are imperative to driving both individual and organisational performance. Scholarly discourse on the development of recruitment and selection techniques illustrates that global organisational assimilation to create 'best practice' is far from reality (Huo, Huang & Napier, 2002, Anderson, 2005). Establishing a thorough and comprehensive recruitment and selection policy will enable an organisation to become competitive within the market and also, with the right people in the right places at the right time, it will establish a high performing culture within the organisation.
The main feature of performance management is the connection between the objectives of an organisation with the job targets of individuals and focuses on work improvement, learning, development, motivation and reward. A performance management system starts with the induction of new staff when they join an organisation and has four elements. They are, defining performance standards and setting targets, reviewing, appraising, enforcement and supporting them by counselling in order to meet performance standards. The review process then identifies the learning and development needs of individuals and allocates rewards for measured outcomes (Armstrong and Baron 2005)
In relation to employee retention and establishing a high performing culture, it is imperative to develop organisation behaviours in order to provide motivation, satisfaction and a sense of empowerment to employees and to do this successfully, it is important to successfully engage employees. Developing an employee retention strategy is one step organisations can take to avoid high levels of turnover. As well as keeping costs under control, cleverly thought out retention objectives that support resourcing and business goals will also strengthen the internal employer brand and therefore contribute to the organisation's ability to attract new talent.
As Guest (2002) outlines, where the psychological contract is positive, 'increased employee commitment and satisfaction will have a positive impact on business performance'. Therefore, it is important that organisations who want to generate a high performing culture honour the psychological contract with the employee.
Engaged employees have a 'sense of personal attachment to their work and organization. They are motivated and able to give of their best to help it succeed - and from that flows a series of tangible benefits for organisation and individual alike' (MacLeod & Clarke 2009: 7).
Cultural Differences, how it effects the Multi National Organisations (MNC'S)
In the light of globalization and the rapid changes facing the world the need for understanding how people from different cultures interact and communicate has assumed a staggering importance' (Bhawuk, 2008, p. 305). The awareness of cultural differences is becoming more essential in nowadays global businesses and is affecting cross-cultural management.
Therefore it is important for MNCs and their managers to develop cultural awareness to sustain management effectiveness across cultural borders (Trompenaar and Hampden-Turner, 1997). Furthermore managers need multicultural interactive skills to be able to understand the differences of domestic culture and the culture of the country they would like to operate in (Parhizgar, 2002). To prepare managers and expatriates and help those to understand the impact of cultural differences as well as how they can deal with it, appropriate training and teaching is needed (Swierczek, 1994)
The growing interest of the on-going debate about cross-cultural differences and its influence on managerial behaviour was initiated by Hofstede (1980) who developed a model which identified several dimensions of cultural differences (Warner and Joynt, 2002). This model has been used ever since for explaining cultural differences and to investigate adequate manager's behaviour in other countries. However, the question is to what extent Husted's (1980) model is really helping managers to understand these cultural differences and how managers can benefit from his model in everyday life.
The four dimensions of Hofstede for evaluation of cultural dispositions are power distance, uncertainty avoidance, individualism / collectivism and masculinity/ femininity.
'The methodology of personnel selection has never been uniform around the world', Huo, Huang & Napier (2002). 'Therefore illustrating that recruitment and selection can never have a universal best practice. Nevertheless, there are some similarities amongst employers transcending national boundaries in relation to recruitment and selection techniques (Huo, Huang & Napier, 2002:31).It was revealed in their 2002 study of cross national comparisons of personnel selection practices.
It was argued by Huo, Huang & Napier (2003) that despite cultural and historical differences, there is an ongoing convergence in global recruiting practices, mainly due to technological developments. Technical competence is deemed as the most important criteria when assessing potential employees and it was also demonstrated as a desirable measure of a candidates suitability for a particular role in future recruitment practice (Huo, Huang & Napier, 2003: 35). The importance placed on technical ability argued within Anderson (2005) who assesses the reasons for 'expatriate failure'. Some organisations choose psychometric testing to determine candidate suitability based on 'soft' attributes, as well as including domestic circumstances in the selection process to assess organisational fit (Anderson, 2005: 578). This technique will facilitate the recruitment of the right people for the right roles, and directly contribute to creating both individual and organisational competitive advantage.
Due to cultural differences, multinational company staffs have different values, beliefs and traditional culture, which determines their different needs and expectations, and the corresponding to meet the needs and expectations of different norms and behaviour. More broadly, an organization can also improve its capabilities for bridging cultural differences. Hiring for adaptability and investing in cross-cultural training can improve workforce capabilities and flexibility. Exposure to and deeper experience with foreign locations and cultures via participation in international teams, travel, and expatriation can inform and grow these kinds of capabilities.
It's the end of the story
At the end it's understand that HR specialists are facing many challenges in the current context, in order to deliver the individual goals as well as the organisational performance. Further, they use the best HRM practices, organisational behaviour activities and tools that can achieve both individual and organisational performance. It is very much important to have the best recruitment, performance management and strategies in order to employ the right people, in the right place, at the right time and also to retain and empower them which can in return contribute to high performance.
