Do you think global pressures can impact your human resource policies?

MNC’s are booming at such a great speed that there is no escape from adapting to the cultural changes. Diversity of culture and its impact on human resource policies has become an important topic of discussion.

Different countries have different management and leadership style, policies and practices, hierarchical structure and control systems. For e.g. Pay for performance scheme which is popular in US and UK, cannot be successfully practiced in another country. Similarly, Japanese spend more money for social and recreational activities than Americans. Organizational policies on training, staffing, motivation etc. have been impacted by cultural changes.

What is culture?

The quality in a person or society or an organization that arises from a concern for what is regarded as excellent in arts, letters, manners, scholarly pursuits, etc. The cultural differences in organization have impacted various HR practices. It has also led to ineffective communication, conflicts and confusion among HR and other employees.

Role of Culture in HRM

Culture in Human Resource Management (HRM) refers to the set of shared values, beliefs, norms, behaviors, and customs that shape the way people in an organization interact, make decisions, and work together. The following points explain the role of culture in hrm within an organization:

1. Recruitment Policy: Every company and every country follow different recruitment policies. Hiring employees depends upon which cultural attitude one is following:

• Ethnocentrism: It is a cultural attitude wherein one’s own culture is considered superior than others. When organization expands their business they tend to follow the same policies and practices in the host country that they follow in the home country. The employees feel negative about such cultural attitude as they find it very narrow and self – centered.
• Polycentrism: The parent company appoints a local manager in the foreign subsidiary as he has better understanding about the culture, behavior and other scenario in the host countries.
• Geo-centrism: Any person can apply for specific position of the organization around the globe. The best manager with the required qualification and experience is appointed. This leads to more interaction and bonding between employees as they get transferred to different divisions around the globe and so understand various cultures

2. Selection Policy: Selection process varies from country to country. Some countries follow extensive selection process like Asia whereas some countries follow short selection process like US. But most of the times, a screening process is followed by sessions with professional psychologist who tries to make you aware of the different culture, work and style of living in the other country. Employees find it very difficult to adapt to the language, dressing and food habits, life style etc that makes him as well as his family depressed. So, an organization should select a candidate who has technical skills, desire to work overseas, good family situations, stress management skills etc.

3.Training and Development policies: This is a process that every employee has to undergo to understand the work, company and its culture. But a manager finds it challenging to train people from different countries having distinct culture, language, food and dressing habits, values and norms etc. e.g. The Americans like to keep a distance of more than 6 inches while interpersonal communication whereas Arabs prefer to communicate closely. Similarly, the significance of words and gestures is different in different countries, which makes it more difficult to communicate effectively. HR Managers find it very difficult to train people from varied cultures.

4. Compensation Policy: Compensation policy has to take into account various aspects like tax, cost of living etc. There is a vast difference in the tax structure, cost of living, retirement policy, pension scheme among various counties. So, while determining compensation an HR Manager should consider all of the above aspects. The compensation paid should be always more than the amount he/she use to get in the home country.

5. Motivation: Manager needs to understand the need to motivate his employees. The meaning of motivation also differs from country to country and therefore culture to culture. The motivation strategy should be culture specific. E.g. Americans give more importance to work and less importance to riches/wealth whereas Chinese give more preference to self achievement and riches. So, HR manager has to have a clear understanding of these cultures and formulate the motivational strategies in this view.

6. Performance Appraisal: This depends upon who will be in-charge of performance appraisals. There should a manager who can provide correct appraisals on time. In many organizations, discrimination takes place which leads to less job satisfaction. Some managers have no idea about the performance of an expat. If the appraisal takes place in home countries there is always a disadvantage of geographical distance which does not give true reports on performances.

7. Leadership Style: Every country follows a different leadership style. Some follow formal, some informal, some have tall structure some have wide, some follow centralized structure and some are decentralized. This difference in leadership style makes manager’s role more challenging. The decision making structure is more centralized in Germany than in UK. Japanese prefer to act as silent leaders, Korean follow the paternalistic leadership style and Arabs consider silence to be weak.

You can make out from the above points how culture has impacted the Human resource policies and practices. These issues on culture can be taken care of if the management is ready to contribute and participate to solve it.

Role of Culture in IHRM

The role of culture in International Human Resource Management (IHRM) is significant and complex due to the diverse and global nature of international organizations. Culture influences various aspects of IHRM, and understanding its role is crucial for effectively managing a multinational workforce. The following points explain the key roles of culture in IHRM:

1. Recruitment and Selection: Culture plays a critical role in the recruitment and selection process of international employees. HR professionals must consider cultural fit, language proficiency, and cultural sensitivities when hiring employees from different countries.
2. Training and Development: Cultural differences impact training and development programs. IHRM needs to design training that is culturally relevant, considering differences in learning styles and preferences.
3. Employee Onboarding: Culture shapes the onboarding process for international employees. It includes orientation to the host country’s culture, local workplace customs, and the organization’s global culture and values.
4. Performance Management: Cultural factors influence how performance is assessed and managed. HRM practices such as performance appraisals and feedback need to be sensitive to cultural nuances.
5. Compensation and Benefits: Compensation packages and benefit structures may vary based on cultural expectations. HR professionals must align these with local norms while maintaining equity across global operations.
6. Global Mobility: IHRM often involves managing expatriate assignments and international transfers. Understanding and addressing cultural challenges faced by employees and their families during global mobility assignments is crucial.
7. Diversity and Inclusion: Culture is a key factor in promoting diversity and inclusion within a global organization. HR practices should aim to foster an inclusive culture that values and respects cultural differences.
8. Cross-Cultural Communication: Effective communication across different cultures is vital in IHRM. HR professionals must be skilled in bridging communication gaps and addressing potential misunderstandings.
9. Conflict Resolution: Cultural differences can lead to misunderstandings and conflicts. HRM needs to be adept at mediating and resolving conflicts in a culturally sensitive manner.
10. Organizational Change: Culture plays a role in how employees from different cultural backgrounds adapt to organizational changes. HR professionals need to consider the impact of cultural differences when implementing changes.
11. Ethical and Legal Considerations: IHRM must navigate the complexities of international labor laws and ethical standards while respecting cultural norms and values.
12. Leadership and Management Styles: Leadership and management styles can vary across cultures. HR professionals need to be aware of these differences and support leaders in adapting their styles as needed.
13. Employee Engagement and Satisfaction: Culture has a direct impact on employee engagement and satisfaction. HR practices should aim to create a positive and inclusive work culture that aligns with the organization’s values.
14. Knowledge Transfer and Sharing: In global organizations, knowledge transfer and sharing may be influenced by cultural factors. HR can facilitate the exchange of knowledge and best practices across diverse teams.
15. Local Compliance: IHRM professionals need to ensure that HR policies and practices comply with local laws and regulations in each country of operation, considering cultural sensitivities.

You can make out from the above points how culture has impacted the human resource policies and practices. These issues on culture can be taken care of if the management is ready to contribute and participate to solve it.

Relevant Articles:

1. Undeniable Influence of Company Culture on Employee Engagement
2. Why Corporate Culture is Important for Organizational Success
3. Understanding & Developing Organizational Culture to Impact Team Performance
4. 25 Best Ways to Achieve Work-Life Balance in a Workaholic Culture
5. How Leadership, Culture & Organizational Structure are Interconnected