Issues that arise in international human resource management
Among all exploited labourers, children are the most vulnerable and suffer the most. Child labour is a moral issue on the responsibilities of the human resource manager and on 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 labour employment in the production of raw materials along the value chain, then all subsequent companies on the value chain are indirectly exploiting child labour for their competitive advantages (Zutshi, Creed & Sohal 2009). International human resource management (IHRM) must choose between profits that favour exploitation of child labour 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 self (Zutshi, Creed & Sohal 2009). 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 purpose and underlines any trade-offs between shareholder and stakeholder values (Kolk & Tulder 2004). Multinational corporations face a dilemma of observing global standards of ethical norms and risking the possibility of driving child labourers into hazardous works, in other local industries, by denying them employment (Kolk & Tulder 2004). Most incidences of child labour happen to industries that are in early economic development stages; however, the belief that economic development is equivalent to exploitation of workers and including children is wrong (Zutshi, Creed & Sohal 2009). Other than establishment of strict codes of practice against under age employment, international companies are developing internal monitoring units for standards included in their code of conduct (Kolk & Tulder 2004).
Corruption and Bribery
Corruption and bribery fall under business ethics and in 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 at their home countries (Briscoe, Schuler & Claus 2009). 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 a number of 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 Corporation rely more on the declarations made by international groups such as the UN, International Commercial Transactions and the International Labour Organization (Briscoe, Schuler & Claus 2009). Multinational Corporations rely on expatriates for organizational learning purposes of their subsidiaries as well 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 paper work 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 warrant (Azolukwam & Perkins 2009). IHRM relies on organizational ethical culture and setup of anti-corruption instruments like whistle blowing 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 intervention (Aswathappa & Dash 2008). To remedy their international business environments, multinational corporations rely on government lobbying whose success is unguaranteed (Azolukwam & Perkins 2009).
Cases of high labour costs increase the temptation to exploit workers so as to obtain more use value of their labour input that 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 that their host governments because they control a majority of the means of production (Miakel 2009). The focus of business is 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 labour (Miakel 2009). Multinational Corporations take comparative advantage of labour abundance in developing countries. IHRM make decisions according to the company’s values and to increase 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 organizations liability on staff welfare. In defence of worker exploitation, managers cite the high costs of capital in developing countries compared to developed countries and argue that to maintain the organization competitive advantage, labour costs should remain low (Nnadozie (ed.) 2003). Other than cut direct labour wages as direct labour 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 their succumb to illness rendering them less productive (Nnadozie (ed.) 2003).
The international business environment has a myriad of individual country customs and traditions embodied in people’s personalities (Nnadozie (ed.) 2003). 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 environment (Vance & Paik 2011). 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 subsidiaries (Vance & Paik 2011). Compensation terms fall under different interpretation depending on the inherent cultural values of the host countries of Multinational Corporations (Li 2001). 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 level (Li 2001). 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 subsidiary (Vance & Paik 2011). 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 appraisal may be incompatible and therefore unusable to the top management of the organization (Mitchell & Meacheam 2011).
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