International Human Resource Management on Globalisation

Globalisation is a process by which the national and the regional economies, societies, and cultures have been made integrated through the global network of communication, trade, transportation and immigration. In general, it is the increased worldwide incorporation of economic, political, cultural, social and religious systems. Also, economic globalisation is the process where the world is made of a single market. It implies that the local and national perspectives of economies open to a wider outlook of an interconnected world with transfer of capital, services and goods across the national frontiers. The globalisation process has increased in the past two decades. Technological improvements have made it easier for people to communicate, travel and transact business internationally. The recent major driving forces are the advances in telecommunications and infrastructure, and the rise of the use of the internet. The theory of globalisation derives from the international mechanisms of integration, with specific focus on the circle of economic connections. In this regard, such perspective is related to the world-systems approach (Kaplan, 1993)

The theory aspects of globalisation are:

a) Recognising global communications systems are important and through this process nations are interacting more frequently and easier.

b) The major communication systems are operational among the more established countries, but are also spreading to less developed countries. This increases the chances of marginalised groups in poor nations to interact while using the new technology.

c) Modern communication systems imply a structural modification in the economic, cultural and social patterns of countries. The latest technological development in communications enables the marginalised to have more access to businesses.

d) Different cultural practices in a country will determine the forms of economic and social structure. The conditions are as an outcome of the prevailing cultural factors within the surroundings of each nation (Moore, 1993).

e) Minorities in respective countries are affected by the new patterns of communications. The politically powerful and the rich in business continue to influence on the decisions of the developing countries unlike the developed countries where they are fully participating.

Characteristics of Globalisation

Theoretical Model Approaches:

These are models in the economy that seek to explain and predict how economies develop or do not develop over a period of time, identify the barriers to globalisation and the ways of overcoming them and give appropriate development policies. They include:

a) The Rostow Linear stages model, which is a linear theory of development to globalisation. It argues that to achieve modernity towards globalisation, countries have to pass through the same stages of development. Economies can be divided into primary, secondary and tertiary sectors. For Rostow, savings and capital formation are central to the process of development, hence globalisation. The key development is to mobilise savings, generate the investment, and set in motion self-generating economic growth which will facilitate the achievement of globalisation.

b) The Harrod-Domar Savings Model, which suggests that a population’s savings provides the funds that are borrowed or invested. Higher rates of savings are transferred into higher rates of investment to generate self-sustaining economic growth, which encourages the growth of globalisation for a better exchange of different savings on a larger scale. The model was criticised in the sense that it is difficult to stimulate the desired level of domestic savings, and that meeting the savings gap by borrowing from overseas causes debt repayment problems later.

c) The Lewis Dual sector model, which explains how labour transfers in a dual economy. Industrial sector growth drives economic growth, which boosts the need for globalisation.

d) The Solow growth model, which suggests that the quantity and quality of resources and technology determine the growth of economy. The improved growth in the economy gives rise to the production of more new products which need to be traded locally, nationally, and globally. This improvement leads to the need for globalisation to usher in more room for trade of the new products.

e) Balanced growth theory argues that a large number of industries developed simultaneously, each generating a market for the other. If different countries coordinate simultaneous investments in many industries where one firm provides a market for the other, this will expand the economy brackets and lead to the need for globalisation to look for more markets for their products. This model was criticised on the basis that it is hard for the less developed countries to apply it due to their limited resources.

f) Absolute advantage model, which suggests that a country or region can create a more of product with the same factor inputs to improve the economy and boost globalisation.

g) Comparative advantage model propagates that a standard for free trade should be adopted. Comparative advantage exists when a country has a margin of superiority in the production of goods and services. In this model, all countries gain, if they specialise in the trade of goods, which is a comparative advantage. This is favourable even where a country in the trading business is more productive in all the traded goods.

h) Unbalanced growth theory which argues that sufficient resources cannot be mobilised to promote widespread coordinated investments in all industries. Therefore, planning or market intervention is required in a few strategic industries. Those with the greatest number of backward and forward links to other industries are prioritised, which will boost the economy of the country and eventually enhance globalisation. The model suggests that the state owned development banks, for the different countries, finance the prioritised investment projects for the contribution to the growth and development of goals that will foster globalisation.

i) The trickle down model suggests that benefits of growth go to the rich countries and people but eventually trickle down to the poor countries and people. This improves the economic level of the countries and facilitates globalisation.

j) The Washington consensus, which argues that a set of liberal policies advocated for by free market economists to encourage growth in the economy and eventually globalisation.

k) The Tobin tax model which suggests that the status of a country to adopt foreign exchange transactions in its economy will reduce speculation and raise revenue for their development. This will improve the economy and facilitate the need for globalisation.

Globalisation theories have emphasised cultural factors as the major determinants that affect the political, economic, and social conditions of countries, which is similar to the comprehensive social school of Max Weber’s theories. It is clear that from the globalisation perspective, this statement from 1920s model of Weber’s theory must apply to the current world conditions in terms of the transference and diffusion of cultural practices through the communication systems that influence many social groups in all different nations (Weber, 1988).

Modernisation Dependency

Modernisation defines globalisation in terms of observable economic, political, social and cultural aspects that affect the economy to achieve a globalised economy. Modernisation is a situation where developing countries achieve industrialisation like the modernised countries have. According to modernisation, modern countries are more productive, their citizens are better educated, and the less privileged receive governmental support (Smelser, 1964). Modernisation is described as a homogenising process. This means that modernisation leads to convergence of different societies. For example, Levy (1967) maintained “As time goes on, they and we will increasingly resemble one another because the patterns of modernisation are such that the more highly modernised societies become, the more they resemble one another”. A major hindrance to modernisation is the frequent use and dependant on traditional practices by countries. The countries should realise that modernisation is a process which is progressive and can take a longer period of time. Further, modernisation is an evolutionary process which impact on the economy would be seen through time. Dependency defines globalisation in terms of dominance by capitalist nations over the less developed in terms of controlling the global economy. Modernisation dependency is a new era in globalisation. This is where the developed countries control the global economy in a manner that is more disadvantaged to the less competitive countries in terms of economy. They do so by placing the following conditions:

a) Controlling the monetary exchange rates by placing more governmental emphasis than monetary policies.

b) Promoting governmental roles in terms of national development.

c) Creating a platform for investments and giving more preferential roles to national capitals.

d) Promoting a more effective internal demand in terms of domestic markets as a base to reinforce the industrialisation process within their countries.

e) Developing national strategies that are according to the model of import substitution by protecting the national production by the establishment of quotas and tariffs on external markets.

f) Generating larger internal demands by increasing salaries of workers, which establish demands in their local markets that need to be sustained (Bodenheimer, 1970).

Convergence

It is the movement towards a point or coming together by countries to unite for a common focus or interest. The coming together is promoted by distinct products that need the application of digital technologies (Merriam-Webster’s collegate dictionary). For example, in the era of digital convergence it can be suggested that the computer will combine the functions of a communication device while the telephone will incorporate the functions of a computer. As we see now, the phone is functioning like a computer, and the computer is functioning like a telephone, which means that the world is being globalised through the improvement of the digital era. It is observed that communications costs have declined to allow an easy contact via the telephone and web, which enables the outsourcing of information technology and other services, and the rise in global work teams. This was observed in India as a case study. The convergence by countries is mainly for the benefits of their individual economies. They use the advancement in technology and infrastructure in their respective countries to transact businesses to their benefit. Trade of products take place where the demand is needed and services exchanged where need be.

Ethnocentric

Ethnocentric is defined as the segregation of others’ culture by the values and standards of their own culture. Ethnocentric countries segregate other groups relative to their own practices of the group or culture, especially with concern for behaviour, customs, language and religion. Developed countries segregate the less developed countries basing on their economic status. Developed countries feel superior and want to control the flow of the economy within the global markets. They influence the aspects of globalisation in their own favour and that of the less privileged countries. Developed countries place conditions on less developed countries to hinder their fast growth through restrictive trade policies. The economy controlling bodies like the World Bank and the International Monetary Fund (IMF) support the more developed countries, a factor that affects globalisation on a wider scale. Ethnocentric attitude of privileged countries towards the less developed countries has a negative influence on the speed of globalisation.

Human Resource Policies for Global Operating Companies

Human resource policies are systems of codified decisions established by any organisation, to support the administration of personnel functions, resource planning, employee relations and performance management. Different companies have different sets of circumstances, and as a result, they develop individual sets of human resource policies. The establishment of human resource policies helps the organisations show that, both internally and externally, it meets the requirements for ethics, diversity, training and its commitments to the regulation and corporate governance of the employees. In an example, dismissing an employee requires the provisions stipulated within the contract signed by the employee to be followed. The setting up of human resource policies that set out obligations and disciplinary laws and procedures is now a global standard approach of meeting the obligations. Human resource policies are also very effective in the supporting and building of a desired organisational culture that aims at globalisation. The human resource policies provide a great start for any company that intends to compete in the globalised business market. It covers the main human resource management laws and issues that are available to affect the company in its growth to attain their goals of globalisation within their economy. It covers a wide range of important employer-employee arising problems and many other regulations that affect the employee-employer policies in the transaction of businesses.

Export is defined as the process of shipping goods and services out of one country to another for the purposes of trade. This mostly occurs in the ports, airports and on the borders. The exportation process enables a country to obtain a product that it is not available within its local market or services that are not provided for. This is only achieved through globalisation, where countries and its citizens make use of the advancement in technology and infrastructure. Overseas is defined as over, across or beyond the sea, a condition where a country is located far from other countries, and separated by water bodies. In terms of globalisation, it is a condition where countries trade with countries that are beyond their reach and are separated from each by large water bodies. The countries are able to exchange goods and services for the betterment of their economy. These can only be boosted by the development of better globalisation factors like better infrastructure (roads, airports and water ports), advanced technologies in the field of telephones and computer, and well educated human services. Localisation is defined as the determination of the place where something is situated. In terms of globalisation, localisation refers to a situation where specific products and services are situated in a distant country, and they have to be accessed for them to be used for trade and consumption. For example, most products are developed in Europe and the United States, while the assembly services are situated in the Asian countries like Japan and China. Localisation will boost globalisation only if the specific countries producing certain products specialise in them. This will protect the products and ensure no imitation occurs, hence an increased in their demand that they will be mandated to supply without unreasonable competition.

The human resource policies for companies that intend to go global entail the following core areas that need to be covered:

  • The employee hiring procedures
  • The employee compensation procedures and policies
  • The employee training and development practices
  • The human resource compliance Policies
  • Human resource strategic planning policies
  • Recruitment, Orientation, and Retention/Employee Relations
  • Human Resource Administration and Record Keeping
  • The administration of salaries and wages for the employees
  • The benefits of administration
  • The employment Labour Law Compliance
  • The training program development and administration for Employees
  • Succession Planning for the Organisation and Business Model.

Globalisation is an aspect of the economy, from which most companies intend to make maximum profits. Countries need to adopt by putting the recognised human resource policies in place for the effective running of their market services and products. ‘Globalisation may change the nature and behaviour of companies that engage in a large scale international coordination, which in turn can transform the characteristics of their HR policy.’

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