International Human Resource Management’ Issues

Issues That Arise in International Human Resource Management

Child Labour

Among all exploited laborers, children are the most vulnerable and suffer the most. Child labor is a moral issue on the responsibilities of the human resource manager and an international scale. On an international human resource management scale, issues move beyond a single company to encompass the whole production chain of the final commodity supplied by a given company. Child labor employment in the production of raw materials along the value chain, then all subsequent companies on the value chain are indirectly exploiting child labor for their competitive advantages1.

International human resource management (IHRM) must choose between profits that favor exploitation of child labor and corporate social responsibility that will likely sacrifice profits. Choices made are justifiable by an organization’s value along the continuum of care for others versus for self2. Managers have no specific course of action to take; instead, they must rely on the moral compass to chart a course that effectively incorporates relative development and cultural customs. Interlinking of ethics and corporate strategy ultimately shapes up an organization’s purpose and underlines any trade-offs between shareholder and stakeholder values3.

Multinational corporations face a dilemma of observing global standards of ethical norms and risking the possibility of driving child laborers into hazardous works, in other local industries, by denying them employment4. Most incidences of child labor happen to industries that are in early economic development stages; however, the belief that economic development is equivalent to the exploitation of workers and including children is wrong5. Other than the establishment of strict codes of practice against underage employment, international companies are developing internal monitoring units for standards included in their code of conduct6.

Corruption and Bribery

Corruption and bribery fall under business ethics and from an international perspective, they present a cultural context and standard local practices that make up the environment of international company subsidiaries. International human resource management (IHRM) must deal with the dilemma of allowing or prohibiting business practices, which are legal in the host country and illegal in their home countries7.

Corruption and bribery are entrenched in a country’s business environment affecting negatively a single company that is not directly engaged in the practice. While there are several means adaptable to changing corruption prevalence in most countries, actual action requires a great amount of political will whose consensus is usually rare. IHRM and Multinational corporations rely more on the declarations made by international groups such as the UN, International Commercial Transactions, and the International Labour Organization8.

Multinational Corporations rely on expatriates for organizational learning purposes of their subsidiaries as well as management of operations according to the company standards and organizational culture. Human resource managers grapple with a pressing need to bride state bureaucracy officials in their host countries to expedite the paperwork process for issuance of work permits for their international expatriate staff. Local staffing is also prone to corruption where local human resource managers receive bribes in staff recruitment and this creates a staff composition that does not meet the merits that international business practices would warrant9.

IHRM relies on organizational ethical culture and setup of anti-corruption instruments like whistleblowing and codes of conduct to deal with internal corruption; however, the efficacy of such measures is only realized within the organization and the external business environment depend on a much bigger intervention10. To remedy their international business environments, multinational corporations rely on government lobbying whose success is unguaranteed11.

Worker Exploitation

Cases of high labor costs increase the temptation to exploit workers to obtain more use-value of their labor input than the actual monetary value compensation. Multinational Corporations are a major source of Foreign Direct Investment capital for most developing countries and therefore possess relatively more power than their host governments because they control a majority of the means of production12.

The focus of business is the realization of profits and the only way to realize profits is to produce more value than the previous production in a given period. Companies generate more value for their products by minimizing costs of production; the easiest cost to cut is labor13. Multinational Corporations take comparative advantage of labor abundance in developing countries. IHRM makes decisions according to the company’s values and to increase the profitability of the company, severely cutting all costs, which leads to worker exploitation where there are no government regulations.

Human Resource managers employ staff on casual terms and contracts to limit their organization’s liability on staff welfare. In defense of worker exploitation, managers cite the high costs of capital in developing countries compared to developed countries and argue that to maintain the organization’s competitive advantage, labor costs should remain low14.

Other than cut direct labor wages as direct labor costs, human resource managers fail to provide similar working conditions for their workers in developing countries to those of workers in developed countries. The cut-flower industry best ruminates the issue of worker exploitation, where workers are not provided with adequate protection, are not compensated for work-related injuries and are sacked when they succumb to illness rendering them less productive15.

Cultural Difference

The international business environment has a myriad of individual country customs and traditions embodied in people’s personalities16. Inter-country cultural differences cause several challenges for IHRM in building formidable organizations capable of functioning as a unit and managing threats and exploiting opportunities presented by the international business environment17. IHRM has to deliberate on what training is necessary for its expatriate staff to successfully adapt and lead subsidiary teams. In addition to cultural adaptation, personal personality profiles of each staff must be the basis of formulating team membership in self-managed team units across multinational subsidiaries18.

Compensation terms fall under different interpretations depending on the inherent cultural values of the host countries of Multinational Corporations19. For example, medical covers might be highly valued as compensation in developed countries, however higher basic salaries are most preferred in developing countries. IHRM also grapples with appraisal implication generated by cultural differences that distort a standardized measurement mechanism. In all cases of appraisal, local managers must be used to validate findings on the grassroots level20.

Home country managers are ill-suited geographically to appraise expatriates because they are unable to relate to local challenges and opportunities present in the host country of the subsidiary21. For multinational knowledge corporations that allow subsidiaries to alter substantially the organizational culture to tap into individual knowledge present in their host countries, it is difficult to appraise successfully local and expatriate staff performance using international standards, furthermore, local approaches used in the appraisal may be incompatible and therefore unusable to the top management of the organization22.

Bibliography

Aswathappa, K, and Sadhna Dash. International Human Resource Management. New Delhi: Tata-McGraw-Hill, 2008.

Azolukwam, Veronica A, and Stephens J Perkins. “Managerial perspectives on HRM in Nigeria: eveloving hybridization?” Cross Cultural Management: An International Journal 16, no. 1 (2009): 62-82.

Briscoe, Dennis R, Randall S Schuler, and Lisbeth M Claus. International Human Resource Management. 3rd. New York, NY: Routledge, 2009.

Kolk, Ans, and Rob Van Tulder. “Ethics in international business: multinational approaches to child labour.” Journal of World Business 39 (2004): 49-60.

Li, J T. Managing Internationa Business. Oxford, UK: Elsevier Science, 2001.

Miakel, Abdulwali Sherzad. Nike in Asia: Opportunity or Exploitation? Norderstedt: GRIN velag, 2009.

Mitchell, Rebecca, and David Meacheam. “Knowledge worker control: understanding via principal and agency theory.” The Learning Organization 18, no. 2 (2011): 149-160.

Nnadozie, Emmanuel, ed. African economic development. San Diego, CA: Academic Press, 2003.

Vance, Charles M, and Yongsun Paik. Managing a Global Workforce: Challenges and Opportunitites in International Human Resource Management. 2nd. New York, NY: M.E. Sharpe, Inc, 2011.

Zutshi, Ambika, Andrew Creed, and Amrik Sohal. “Child Labour and Supply Chain: profitability or (mis)management.” European Business Review 21, no. 1 (2009): 42-63.

Footnotes

  1. Zutshi, Ambika, Andrew Creed, and Amrik Sohal. “Child Labour and Supply Chain: profitability or (mis)management.” European Business Review 21, no. 1 (2009), p.59.
  2. Ibid, p.60.
  3. Kolk, Ans, and Rob Van Tulder. “Ethics in international business: multinational approaches to child labor.” Journal of World Business 39 (2004), p.52.
  4. Ibid, pp. 51-56.
  5. Zutshi, Ambika, Andrew Creed, & Amrik Sohal. “Child Labour and Supply Chain: profitability or (mis)management.” European Business Review 21, no. 1 (2009), pp.55-60.
  6. Kolk, Ans, and Rob Van Tulder. “Ethics in international business: multinational approaches to child labor.” Journal of World Business 39 (2004), pp. 50-56.
  7. Briscoe, Dennis R, Randall S Schuler, & Lisbeth M Claus. International Human Resource Management. 3rd. New York, NY: Routledge, 2009, p.378.
  8. Briscoe, Dennis R, Randall S Schuler, & Lisbeth M Claus. International Human Resource Management. 3rd. New York, NY: Routledge, 2009, p. 380.
  9. Azolukwam, Veronica A, & Stephens J Perkins. “Managerial perspectives on HRM in Nigeria: evolving hybridization?” Cross-Cultural Management: An International Journal 16, no. 1 (2009), p.70.
  10. Aswathappa, K, and Sadhna Dash. International Human Resource Management. New Delhi: Tata-McGraw-Hill, 2008, p. 278.
  11. Azolukwam, Supra, p. 68-70.
  12. Mikael, Abdulwali Sherzad. Nike in Asia: Opportunity or Exploitation? Norderstedt: GRIN Verlag, 2009, pp. 4-6.
  13. Mikael, Abdulwali Sherzad. Nike in Asia: Opportunity or Exploitation? Norderstedt: GRIN Verlag, 2009, pp. 4-6.
  14. Nnadozie, Emmanuel, ed. African Economic Development. San Diego, CA: Academic Press, 2003, p.356.
  15. Ibid, p. 354.
  16. Ibid.
  17. Vance, Charles M, and Yongsun Paik. Managing a Global Workforce: Challenges and Opportunities in International Human Resource Management. 2nd. New York, NY: M.E. Sharpe, Inc, 2011.
  18. Vance, Charles M, and Yongsun Paik. Managing a Global Workforce: Challenges and Opportunities in International Human Resource Management. 2nd. New York, NY: M.E. Sharpe, Inc, 2011, p. 481.
  19. Li, J T. Managing Internationa Business. Oxford, UK: Elsevier Science, 200, p.191.
  20. Ibid
  21. Vance, Supra p.365.
  22. Mitchell, Rebecca, and David Meacham. “Knowledge worker control: understanding via principal and agency theory.” The Learning Organization 18, no. 2 (2011), pp.149-152.