Thus, to lower costs, it is critical for MNC to adopt HR standardization. (Dickmann,2008).
Despite the argument in support of standardization of HR, there are challenges that a global company may face while implementing standardized HR practice on a global basis.
The challenge in practicing standardization is that MNC needs to develop a HR resources strategy to attract, retain, and motivate talented employee that is well suited to a particular setting. With cultural difference among different countries, integration of HR practice from the headquarter may not be suitable to the company subsidiaries. Typically, it is critical for a global company to assess the strategy that could be employed as well as identifying main mechanisms that the company could use to facilitate integration and knowledge transfer. Cultural norm from country-to-country affects the HR policies and practice. The cultural norm in Japan often affects the relationship of Toyota workers with their employer and the factor often influences worker performances.
Typically, "Japanese workers have often come to expect lifetime employment in return for their loyalty, for instance. As well, incentive plans in Japan tend to focus on the work group, while in the West the more usual prescription is still to focus on individual worker incentives." (Dessler et al. 2011 pp 3-4).
Different in the labor costs is another challenge that may hinder standardization of HR on a global basis. The labor costs that focus on efficiency such pay-per-performances is different from country-to-country. For example, the pay-per-hour for a production worker is $25.56 per hour in Germany while pay-per-hour for the same job is $2.65 per hour in Mexico.
Differences in the countries economic development also serve as challenges in the practice of standardized HR practice. In a free market enterprise, market forces often dictate the HR policies and practice. Motivation of workers may be relative low in countries experiencing high employment compared with countries with low unemployment rates. Based on the challenges in the implementing standardize HR approach, there are cases where it is critical to adopt different approach.
Where would you allow different approaches?
Different approach to standardized HR practice may essential when there is a difference in international compensation. Living condition in one country is different to another country, and it is may be extremely expensive to live in one country than the other. For example, workers experience high cost of living in Japan compared to Greece where cost of living is low. In a country such as Greece or Spain, it is critical for a global company to adopt different approach to standardization based on the economic difference of these countries. For example, an average marketing director is earning $3,000 per week in Tokyo, however, it will become challenging to relocate the same marketing director to a country such as Greece, Spain or Mexico and ask the director to earn half of what he is earning in Tokyo for the same job because the cost of living is low in these countries.
Moreover, different approach to a standardized HR is essential where there is a relatively low level of skilled labor or when it would be very expensive to train an employee to acquire the skills of first-rate worker. For example, the number of skilled labor in Mexico is lower compared to number of skilled labor in U.S., Canada, or Europe. Different approach need to be adopted in countries with relative low skilled manpower. Chen and Wilson (2003) argue that different approach is necessary where local manager believe that local HR management practice is only suitable in the local environment and MNE practice could not work in the local circumstances due to cultural differences. In addition, different approach is essential in a country where the management already have
"ability of local managers to control access to the labor market and product distribution channels, expertise and information may effectively stymie standardization efforts -- either directly or indirectly (strategic driver of resource power)."(Chen and Wilson 2003 P. 400).
However, it is still possible for a global company to implement global policies in each of the subsidiaries. With implementation of different strategy, it is possible to implement global policies in the MNE subsidiaries.
3. How would you ensure that global policies are implemented by each of the subsidiaries?
To implement global policies in each of the subsidiaries, the company will need to implement the same corporate culture of the parent company to each of the subsidiaries. Caligiuri and Stroh (1995) argues that the more mature local subsidiaries become the more they become resources independent with respect to strategic resources such as capital, technology, access to market and management control. When the subsidiaries have become totally independent from the parent company, the parent company may lose the total control of subsidiaries if the headquarter...
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