Outline the importance of human resources management for the
successful operation of international strategic alliances. Assess the
significance of the major problems encountered by partners in the design and
implementation of effective human resources management practices.
Introduction
In the ever
competitive, challenging and dynamic business environment, businesses no longer
able to stay alone or to compete effectively with other businesses in the ever
globalized world. Today, competition is leveled to the extent whereby a network
of companies is competing with another network of companies. A single entity or
corporations is hard to survive or to fulfilled the ever demanding customers’
needs and expectations, while it is also not effective for only a company to
compete against the well-established network of competitors. In fact, the
competition between businesses had intensified in the recent years in an ever
globalized and integrated world, whereby business cooperation or strategic alliances
had extent beyond borders. Today, businesses are partnering with businesses
from other nations, to form stronger partnership or collaborations between
businesses of different countries for different types of benefits.
In the context of
international strategic alliances, one highly critical issue to be aware of by
senior management is the human resources management (HRM) practices or system
to be applied in the organizations involved in the strategic alliances
(Dessler, 2011). Although many HRM issues that is critical for an organization
persist in managing people in the international strategic alliances context,
the people management issues is more complex in an international strategic
alliances arrangement, due to potentially distinctively different cross
cultural and social factors. Thus, in this article, the importance of HRM for
successful implementation of international strategic alliance will be
discussed. Furthermore, the problems faced in the implementation and design of
effective HRM practices that could be encountered by partners in the design and
implementation of effective HRM will be discussed as well.
Importance of HRM for Successful International Strategic
Alliances
In business management,
human resources management is a very important area to be managed, as human are
ultimately the key contributors towards the success or failure of an
organization. In fact, in the ever competitive business environment, the
requirements of human resources management are becoming more prevalent.
Firstly, as the world enter into a knowledge based economy, people skills and
competencies had now replace the other sources of competitive advantages, such
as capital, machinery or other forms of business assets in determining the
relative performance of a firm in the challenging world. Secondly, as the
business landscape is becoming more competitive, businesses are competing to
recruit and retain talents in the organization. Talent wars are not something
uncommon today. Thus, all these are causing that HRM is increasingly important
to an organization in the new economy system.
In such a scenario, the
importance of HRM is becoming more obvious and prevalent as the businesses
expand towards the global arena for bigger market shares, to growth and
profitability, as well as to reach better economies of scale or stronger brand
name in the world. In the context of international strategic alliances or
partnerships, human capital has been the key criteria determining the degree of
successfulness or effectiveness of cross countries collaboration or alliances
(Ming, 2002). This is because cross cultural or cross nations expansion and
collaborations are complex and complicated process, whereby the organization
must become more changeable, adaptable, flexible and responsible in the
different business environment, due to the differences and sometimes, even
contradictory social cultural environment and consumers preferences, attitudes
and behaviors. In facing with the challenges to operate or cooperate in a
different business environment, it is becoming more important for the
corporations to have smart, talented, dynamic and motivated employees to deal
with the challenges troubling the firms in daily operations or decision making
process. In such a scenario, HRM is very important in assisting a firm to become
more effective and successful in the international strategic alliances process.
Besides, from another perspective, HRM is also crucial to ensure effective and
proper management within the organization. HRM is not only crucial towards
achievement for success of competitive advantages of international strategic
alliances in the external environment, but is also very important in
coordinating smooth, responsive and effective operations internally. Within the
firm, HRM is crucial to bring the people, primarily from different cultural
background, of different behaviors, attitudes, beliefs and assumptions into a
team (Dessler, 2011) that can focus and work together in the accomplishment of
the corporation missions and visions.
In fact, the importance
of HRM in international strategic alliances is nothing can be denied by the
practitioners, as people have been observing that cross nations or cross
cultural alliances have been hard to achieve success due to people issues
(Berrell et. al., 1999). This can be witnessed by the abundance of literature
of cross nation or international strategic alliances to be linked to the issues
of human resources management. This is nothing hard to understand, as managing
of people and workforce is complex, particularly in the context of managing
people from different cultural settings. Besides, when people of different
background and cultural settings interact, the psychological process due to the
interaction can be complex, dynamic and hardly predictable. Thus, it is not
hard to see that researchers are arguing that cross cultural management is a
new topic to be taught to business students, and in the context of real world
corporation business management, to the many employees. It is argued
extensively that education, training and development of employees related to
cross cultural issues, in terms of cross cultural interaction, and alliances is
critical for any firms to become effective in collaborating with other firms
from other nations.
Problems Faced in Implementation and Design of Effective HRM
Practices
As argued above, the
importance of HRM towards successful design or implementation of international
strategic alliances is not something that can be denied. Nonetheless, although
the importance of HRM is acknowledged, the challenges or problems usually faced
by management in the context of international strategic alliances are something
worth discussing. It is very crucial to understand and investigate these issues
in depth, so that as the managers understand the potential challenges or
difficulties, they can set their expectations accurately and plan in advance to
deal with these problems or challenges.
One of the key issues
of international strategic alliances in the context of HRM is the staffing
process to be employed in the joint venture or alliances. Staffing can be
crucial as people may be highly sensitive to the appointment of people to fill
the different positions in the joint venture. For example, one very sensitive
issue is about who should take the leadership position, and in case of
conflicts, who has the main say to deal with the difficult decision making
process. Besides, the leadership of key management positions is sensitive as
each partner will definitely want to appoint their personnel to safeguard their
respective interests and well beings in the strategic alliances. Not only is
that, it is also crucial to understand if the personnel appointed understand
the cross cultural different and able to lead the people from diverse background,
social cultural settings or mindset toward achievement of the goals set
forwards in the international strategic alliances. In many joint ventures, the
operations fail badly due to the fact that people from one side do not want to
obey the order sincerely from the management, whom is appointed from the other
partner. It is also not something uncommon that the key leader appointed simply
unable to lead the diverse workforce, and had made deadly wrong decisions in
managing the people.
Apart from that,
another common problem faced in international is about the promotional process
in the alliances. For this issue, it tends to arise when the parent companies
send certain personnel from the parent companies to work in the joint venture.
As the career path design and the HRM system or practices in the parent
companies may be distinctively different from that of the system employed in
the joint venture, these personnel may face harder promotional issues in the
newly formed strategic alliances. Besides, people may not be willing to try out
new things, or to face the risk of uncertain career path or promotional
opportunities when they are asked to join the new venture. Thus, overall, it is
crucial to understand that the differences between promotional opportunities of
the concerning promotional system or career path designed for the employees may
be working against the senior management intention to send the relevant or best
people to spearhead the joint venture. The system to attract good staffs to the
new joint venture is critical and impactful towards affecting if experienced
staffs are willing to take up the risks to participate in a new business
venture under the international strategic alliance. It is crucial for the firm
to understand how the reward system differ from the parents companies to that
of the new joint venture. It can be reasonably expected that people may need
time to get accustomed to the new rewards system and to make sense of that system.
Besides, there are also questions if the reward system is relevant and
effective in managing workforce. If the reward system is not designed properly,
people simply may not able to work effectively (Ming, 2002), or to adopt
different attitudes to gaming the reward system for personal benefits.
Similar to the reward
system, the performance management system in the newly formed joint venture
between two companies in the international context may not be effective or
accurate in managing the workforce. For example, it is definitely not easy to
decide which companies’ performance management system to be used in the newly
formed joint venture. Besides, it is also challenging to decide which
companies’ performance appraisal or management system to be adopted in the new
venture, and if these policies, practices or procedure will require adjustment
or amendment to fit the local context. Negotiation between the two parents
companies may be a long process. However, it is reasonable also to expect that
if the agreed upon performance management system can effectively guide and lead
the employee performance in the newly formed corporations. In this issue, the
different cultural settings, or workforce mindset, assumptions, expectations
and educational background may be great challenges to be handled (Thang et.
al., 2007). In fact, it is also reasonable and mind boggling to ask if there
really exist any effective or great performance management system to manage
people of different cultural, experiences, educational or social background
(Matveev et. al., 2004).
Not only is that, there
are also issues of employees loyalty in the newly formed joint venture under
the theme of international strategic alliances. As people may be transferred
from the parent companies to the new joint venture, it is uncertain if the
staffs working under the new joint venture are loyal to the new company.
Besides, it is also issues if the people from different companies can work
together effectively, with trustful relationships among the many staffs in the
new venture. This is important as the degree of trust will affect how people
interact. For example, without trust within the people, people may not able to
work effective for common goals, to share ideas, to support each other and to work
in a team for better performance and attainment of certain organizational
objectives. When trust does not present, conflicts between people can be more
serious and frequent, and when that happen, people no longer able to work
effective, or simply to concentrate on the work, but instead engage in
detrimental or non-productive activities to deal with the tricky situations or
non trustworthy staffs from the other parent companies.
When two different
entity, particularly those with different corporate culture or corporate
values, meet together, there is bound to have huge problems in the decision
making process of the newly formed joint venture. For example, people from
different corporations may have very different rules or practices in decision
making process, as they are guided by different cultural factors of values
previously. People are likely to get stunned when they found that the people
from other side of the partner tend to have very different ideas, and
judgmental rulers in the decision making process’ particularly one that is
contradicting or opposing to their current beliefs or practices. Thus conflicts
management within the organization between the staffs are crucial and indeed,
not to be ignored. There must be proper ways to solve the conflicts between
people in the organization, and how to utilize the different ideas, and the
advantages offered by the diversity of workforce for better achievement and
performance in the newly formed company. In fact, as we had discussed above,
the decision to choose who is the key person that can make the ultimate
decisions are crucial to the success of any joint venture. The practices or
policies must be fair, and take the interests of both parties involved in the
international strategic alliances into account before any materials decision is
to be made.
As discussed before,
cultural differences between people in the context of international strategic
alliances is the key barrier preventing effective or successful joint venture
between many firms from the west to firms in the east. In fact, the culture
between different regions of the world is so obvious that researchers have
developed different framework to characterize the different cultural dimensions
between people around the world. According to Hofstede (2003), cultural
differences can be analyzed from four key dimensions, such as high or low power
distance, individualism or collectivism culture, either masculinity or
femininity, and lastly, either high or low uncertainty avoidance. All these
will certainly affect the effectiveness of cross cultural communication, as
people may not see eyes to eyes or able to understand the intended meanings to
be conveyed by the counterparty of different cultural background (Harvey et.
al., 2002). In fact, in many of the instances, people may simply not able to
realize they the way they behave or communicate had already offended the other
with different cultural beliefs or assumptions. Thus, it is important for
management to understand the difficulties of communication within the joint
venture, and to understand if the information technologies or communication
channels available in the joint venture is effective and relevant. There are
also challenges to which how the management can set up best practices to aid
the accurate communication process between people from different cultural or
social background. In event that the people are not able to speak a same
language (Matveev et. al., 2004), the challenges in the strategic alliances is
even more critical.
Depending on the
location of the joint venture, there is bound to have unfamiliarity or cultural
shocks of certain people in the new environment (Awang et. al., 2010). For
example, when people working in the UK is sent to take up managerial expatriate
roles in the new company in China, these expatriates will certainly faced some
degree of unfamiliarity and challenges to adapt to the new business or
workplace environment. Thus, it is important for the senior management to
understand that such issues of unfamiliarity can be great impendent to proper
performance from these employees, which definitely need certain time frame to
suit the new business landscape or workplace (Dunbar et. al., 1990). The
learning curve of these expatriates can be steep (Hogan et. al., 1990). Thus,
it is crucial for HRM personnel to develop effective training and development
program to assist these expatriate to become more culturally fit in the
different environment (Caudron, 1991).
Conclusion
Overall, this paper had
discussed the how the competition landscape in business environment around the
world had evolved. Today, businesses are competing in a network manner, where
companies are required to partner with other strategic partners for mutual
benefits in the every challenging marketplace. This gave rise to the issues of
international strategic alliances. As the competition is becoming more global,
and the process of globalization is not expected to be reversible,
international strategic alliances are not something that can be ignored by
business managers or academicians. In fact, this article had also discussed
extensively on how HRM are important in the context of international strategic alliances.
In the first part of the writing, it is argued that human resources management
is crucial for the success and superior performance of the joint venture. This
is not hard to understand as people is the moving forces that work together in
a team under a joint venture between firms from different culture or nations,
towards achievement of the predefined company or cooperation objectives. In the
second part, the challenges, problems, common issues as well as the
difficulties faced by managers in international strategic alliances are
discussed. All these are critical as it provide accurate awareness and
expectation for managers to ponder upon before they enter into any strategic
alliances across nations or culture.
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