International HRM Practices: Emphasis on Australia
This essay addresses the issues and examples of Human Resource Management (HRM) used as a competitive advantage in Multinational Enterprises (MNEs) via an international perspective. It analyzes the employment relations and its impacts on the HRM approach taken by MNE companies operating in Australia.
Tool of Competitive Advantage
Competitive advantage is a necessary strategic position which firms must possess and occupy against its competitors from being ousted in the industry. There are usually two forms of competitive advantage which include cost and differentiation advantage (Porter, 1985). This normally applies to the horizontal and vertical sections across the hierarchical structure in the company. HRM and related practices should be regarded as a key component that will provide that edge. Burke & Cooper (2006) found plenty of evidence to show that the use of effective HRM practices would lead to better staff motivation and thus performance that would result in a more productive organization and retentive workforce.
In this respect, skills that are valued will often be recognized and transferred to other roles that demand a fresh perspective. They continue to support the argument that if HRM focuses on increasing the talent pool with broad skills and self-monitoring abilities, this would result in a great strategic lever for the organizations and assist in reducing administrative and recruitment overhead costs. This likens to a system that recognizes problems efficiently with the confidence that such problems will self-correct without a need for top-down checks. But can such a system be totally realistic and intertwined with transparent and accountable values? Would this strategic lever lead to arrogance and contempt of the organization?
Empirical evidence shows that if such values and recruitment selection were accompanied with the ability to work immediately with minimal training, a well-defined job content, a career development based on specification and performance evaluation and payments based on external equity, then firms would be able to use such measures and approaches as a means of HRM innovation that are different from their competitors. One example as researched by Tze, Nickson & Baum (n.d.), highlighted the strategy and concept used by a service apartment as the first in the history of UK’s service industry that seemed to match the features of a firm looking for innovation. The employees are trained by the Mission Inn Possible Package (company training project) and granted power to deliver such service promises. Apart from these, the more complaints that an employee receives, the more they learn from mistakes, and the more attention is paid to preventing a repeat of service faults, and the less human resource activities are required to recover service failures. But would such a concept be suitable and easily applied in a context whereof MNEs do not readily encourage mistakes and self-empowerment? Thus, certain core HR traits which maintain advances in services and products quality are innovative strategies, but only if they are positioned appropriately.
However, Porter (1985) argues that any strategy is a race to one’s ideal position, the creation of a unique and valuable position, where a firm can differentiate itself for the targeted customer and add value by an asset of activities different than those of rivals. This can usually help even in an international context where remote organizations are set apart from their headquarters and the strategic lever can become more apparent in the implementation approach. This would apply in a case where certain first world nations practice the hiring policies of Equal Employment Opportunity. This would result in fair hiring practices that are non-discriminatory with little bias toward certain traits (Schuler & Jackson, 1999). Furthermore, there are many international organizations such as foreign banks and educational colleges that seek legitimacy of their status and products from super-ordinate accrediting agencies, many of these entities which are non-visible or non-existent in the firms’ parent country. To gain any form of advantage against other competitors, HRM must seek to ingrain a context of pluralist values into the culture of the organization that ensures and defines the desired outcomes.
This pluralist values can be attained from the perspective of international practices. As new firms become engaged in global transactions and commerce in new and unfamiliar countries, HRM can tap into a global base of talents that might not have been considered previously for international assignments. Walmart is a perfect example of a company that hires employees for immediate short-term and long-term international assignments. But in order to recognize these global challenges, HRM has to learn to manage the performance of expatriates from posting to return postings. According to Mabey, Salaman & Storey (1998), effective international HRM measures and approaches could bring the benefits of social responsibility, continuous learning, inclusive participation, and less reliance on one type of system. Such measures and approaches by definition are a combination of the ends for which the MNEs are striving to dominate a position of sustainability and growth for the company. But in many countries, such ends achievements and benefits are still considered as a ‘litany of wishes’.
The key question then would be, “Are MNEs willing to consider a suitable model of HRM systems and approaches that would suit the parent country?” Would MNEs be ambivalent about creating HRM information systems in countries where the governments do not promote awareness of informatization. Would human capital and structure be readily available and aware of international practices? In Germany and Japan where strong HRM links and support are available, foreign MNEs can take advantage of well-developed systems of training and development, co-determination of its long-term orientation and investments with in-house career systems and mode of operations as well as workers’ representatives on the board for counseling companies’ directional growth (Mabey et al, 1998). Different HRM strategies that are adopted will churn out different results depending on the context and mode of operation of the international MNEs investing in foreign countries. In a decentralized MNE without a pure global strategy, its activities are loosely integrated from the parent company and that does not deviate from the overall objectives such as making profits.