Globalisation and IHRM

Human resource management is an organization’s administrative wing that handles all

employee-related problems. These challenges include recruitment, workplace safety, benefits &
compensations, policy administration, performance management, training, etc. International
HRM is a term encompassing all the HR practices involved in managing a global workforce.

The HR policy of every organization depends on the labor laws and legislature of the country
where it operates. And with globalization, the ever-changing competitive business environment
started expanding with the free flow of human resources and technology across borders.
Naturally, this impacted the day-to-day operations of all businesses, and HR management is no
exception.

To understand the impact of globalization on human resource management, we must first

understand the changing priorities of recruitment, added benefits, and the challenges of
globalization in IHR management.

Impact of Globalization on International Human Resource Management

In the era of globalization,I HR management is slowly shifting from its previously assigned
traditional tasks, such as administration, transactional, and personnel roles. But as modern
businesses face several complex hurdles, their HR departments must also make a few
adjustments to adapt.

This transformation directly stems from globalization and competition trends in human resource
management. Today, businesses want their IHR Management to add value to the strategic
utilization of employee programs.

In the face of global competition, the decision-making system in organizations has become
complicated. They need advanced IHR systems that can interpret the data to deliver business
insights, anticipate future requirements, and devise strategies to cater to pressing needs. The
challenge becomes further aggravated as there’s a significant shortage in the global talent
supply compared to its long-term demand. Hence, the next-generation of organizations will likely
suffer from the lack of highly skilled workers as the skill gap will deepen over time.

Considering the impact of globalization on HR practices, companies will need to prioritize

investment in human capital over financial capital. After all, effective HR management is the
foremost determinant of whether or not a company can become a global leader.

Major Areas of Impact of Globalization on International Human Resource Development

Due to globalization in human resource management, modern HR managers must conceive
strategies catering to both local and remote employees. For instance, a Germany-based
business hiring people in Europe and Asia must ensure that its HR strategy adheres to local and
international standards while being culturally appropriate.
Hence, the impact of globalization on human resource management pushes HR management to
rethink their core strategies.

Labor laws
Globalization’s impact on HR management is directly related to a country’s labor laws. For
example, the minimum wage in Canada will vary from that in the US. In the same way, Australia
and China’s rules on employee benefits and compensation differ. The minimum working hours in
Malaysia, India, Britain, and Hong Kong will depend on the country-specific labor laws.

So, global organizations must keep such factors in mind while drafting their HR strategies. Their
HR management must possess a thorough knowledge of the domestic and international labor
laws of the relevant countries. Violation of labor laws can lead to severe legal issues.

Recruitment
Employers recruiting foreign employees can vouch for the rapid change in the hiring dynamics.
Different countries have varying names and follow unique evaluating criteria for educational
qualifications and certificates. For example, you want to hire a candidate for a position with a
minimum educational requirement of an MBA degree. The evaluation method for the MBA
degree will vary from country to country, ranging from the degree name to the grades or credits
offered in the course.

Thus, HR departments must be aware of the country’s evaluation criteria for educational
qualifications from where they are hiring and judge candidates accordingly.

Training
Companies usually offer extensive training to new recruits, detailing their job responsibilities and
the company policies. However, the impact of globalization on HR practices demands distinct
training modules for a global workforce. For example, if an employer transfers a local employee
overseas, they must train them per offshore work expectations and culture.

Expatriation
Thanks to globalization, companies must train their employees to function in different countries
with their regional offices. In fact, globalization in human resource management demands HR
departments to develop exclusive strategies for recruiting, training, retaining, and motivating
expats.

Communication
Communication procedures are a prime example of how globalization is influencing human
resource management. The varying time zones pose a severe problem for multinational
companies operating in different countries. For instance, while the regional head office in one
country wraps up work, an office in another country might just start its workday.
Consequently, the HR department must design specific communication strategies to establish
synchronized coordination among the different regional head offices, keeping in mind remote
employees as well.

Major Challenges of Globalization in Human Resource Management

Since globalization brings numerous global tenets together, modern businesses face multiple
challenges. HR departments must tackle these issues efficiently to help businesses flourish and
stay competitive.

Some of the major challenges of globalization in human resource management include:

Attracting and retaining talent

With ample entrepreneurship opportunities and employment prospects available today,
employees choose organizations having an excellent work culture and pro-employee stance.
Hence, the best way to attract talent in this era of globalization in human resource management
is to comprehend their workplace expectations during the interview. To retain employees, HR
teams must create effective engagement plans, provide them with ample scope for growth, and
help them strike a work-life balance.

Privacy and Security

A company’s employees and data are the responsibility of the HR department. As countries
function across borders, the amount of data generated every day increases exponentially. This
compels HR teams to monitor their human and intellectual resources strictly and protect them
from security breaches. They must implement adequate security measures and draft
well-thought-out confidentiality agreements for vendors.

Conflict management
Organizations now hire employees from diverse cultural and social backgrounds. Managing a
diverse workforce can get challenging due to cultural sensitivity and may sometimes lead to
disputes in the workplace. As an impact of globalization on HR practices, HR executives must
clearly define acceptable workplace behavior and encourage open communication channels to
avoid conflicts during work.

Managing diverse workforce

The globalization of the workforce has created a mixture of remote and on/off-site teams across
different genders, cultures, locations, and ages. So, it becomes crucial to cater to the needs of a
diverse employee group, which demands a global HR policy. HR practices must percolate
across different company parallels, teaching employees to respect their co-workers while
maintaining workplace boundaries.

Performance management
Globalization in human resource management means devising innovative evaluation measures
to keep employees focused and motivated. HR teams can create a constructive feedback
system for regular evaluations instead of yearly assessments. The rise in the enrollment for
performance management certification is another example of how globalization is influencing
human resource management.

Compensation package
It is a challenge for companies to devise balanced benefits and compensation packages for all
employees across different countries. So, a company’s HR department must create a definite
system by considering the labor laws of the countries where it operates to avoid penalties and
legal complications.

Globalization in Human Resource Management: Advantages & Disadvantages

Globalization has rapidly changed how organizations operate and run their business. The
impact of globalization on human resource management is mainly evident in the cross-cultural
communications of companies. Different countries have different cultural sensibilities, time
zones, labor laws, legislature, and regulatory impositions. Hence, HR management must always
consider these factors while designing company HR strategies.

Advantages of Globalization in HR Management

Globalization offers numerous advantages to businesses. For example, a company can pay
significantly lower wages and have lower overheads in comparatively lesser developed nations.
They can also benefit from lower corporate tax rates, reduced business set-up costs, etc.

New ideas due to cultural diversity

A global workforce comprises crews operating across various locations, functioning across a
wide range of work ethics and practices. By taking a unique approach to HR management,
organizations can infuse diverse insights, perspectives, and ideas into their work culture.

Larger markets
Globalization has opened up unique possibilities for corporations to sell their services/products
on the international market, increasing sales and profits. Globalization in human resource
management means more qualified employees can handle sales and marketing remotely.

Ability to tap into a wider talent pool

A positive impact of globalization on human resource management is that companies need not
restrict themselves to specific locations while hiring. Thanks to robust internet facilities, online
meeting platforms, and rising work-from-home opportunities, companies can hire the best
candidates worldwide.

Disadvantages of Globalization in HR Management

One of the major challenges of globalization in human resource management is the necessity to
learn the varying cultural differences of a diverse employee pool.

HR departments must continuously stay updated with the labor laws of different nations, devise
communication strategies, integrate diverse value systems, and coordinate the activities of all
employees to achieve company goals. They must have a deep understanding of foreign labor
issues, international labor relations laws, and employment regulations to devise suitable
employee packages. This can be pretty time-consuming, overwhelming, and complicated.

Conclusion
Today, human resource management has evolved into a core part of any business. However, it
might be challenging for companies functioning overseas to create inclusive HR policies without
proper guidance and legal knowledge. Multiplier is a global PEO-EOR firm that can be your
one-stop solution for all HR issues. Our in-house experts can inform you about the local laws of
over 150 countries, thereby helping you comply with national and international regulations.