Professional Documents
Culture Documents
“World is Flat”
Thomas L. Friedman
Prepared By: Ahmed Mujuthaba ( )
Lakshan
Ahmed Waheed (10169777)
Venura
Lecturer: Mr.
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TABLE OF CONTENTS
Nature of Work................................................................................................................................5
Technological Advances..................................................................................................................6
Off-shoring ......................................................................................................................................7
Best Practices...................................................................................................................................7
Conclusion ....................................................................................................................................14
Executive summery
The purpose of this easy is to analyze and evaluate the Impact of Globalization and the
challenges of human resource management in response to the globalized world. HRM is a very
vital part and parcel of “management” in the globalized world to draw an effective workforce,
develop the workforce to its potential and maintain the workforce over the long term in response
to the world of globalization. Throughout this easy the main HRM challenges in the global
market and how does globalization affect human resource management have been outlined.
Gimps on the role of HRM in the globalized world is also been discussed while strategic HRM
has been used as a tool for the response of the challenges of Globalization. Further managing and
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training for global business is also been discussed to reduce the uncertainty of multicultural and
Multilanguage barriers. Finally implications for HRM practices as a measure of readiness is been
evaluated through this easy.
Introduction
Globalization symbolizes the structural making of the world characterized by the free flow of
technology and human resources across national boundaries presenting an ever-changing and
competitive business environment. A vital aspect of globalization is the way diverse challenges
are being faced by nations in an increasingly inter dependent world. This easy is to provide
comprehensive analysis of human resource management and its challenges in contrast with
globalization. The study of International globalized Market with the cultural and legal barriers
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and the importance of Strategic human resource management has been despised throughout this
document.
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human resource management issues that are particular for the global enterprise. The key issues
involve are staffing policies, selecting and retaining talented employee, training and development
whilst encouraging employees to be innovative and creative, culture barriers, and legal frame
work. Others issues include understanding the challenges of living and working overseas,
performance appraisals from a distance, training and management development, compensation
packages, and labour relations and organized labour laws.
Globalization refers to the shift towards a more integrated and interdependent world economy.
The drivers of the globalization are the declining barriers to the free flow of goods, services, that
has occurred since the end of World War II and the dramatic technological development in
recent years, particularly in the fields of communication, information processing and
transportation technology (Jain and Hill, 2008). Globalization influences organizations that
compete for customers with high expectations for performance, quality and cost. Globalization
also exerts pressure on Human Resource Management (HRM) function to adapt to organizational
needs and add greater value (Friedman, 2007).
Further globalization leads to more competition and more competition pressure to be “world-
class” to lower costs, to make employees more productive, and to do things better and less
expensively. As one of the expert place it, “the bottom line is the growing integration of the
world into a single, huge market place is increasing the intensity of competition in a wide range
of manufacturing and service industry”. Firms like Dell cut off their global HR communication
cost, formulating selection, training and compensation policies for expatriate employees.
Managing globalization in world class firm is a major human resource challenge (Dessler, 2007).
Globalization has affected human resource management in terms of nature of work,
technological advances, demographic factors, best practices and exporting of jobs.
Nature of Work
Globalization and the improvement in technology have changed the nature of work in
organizations. Due to the competition pressure, organizations try to lower costs, to make
employees more productive, and to do things better and less expensively. To keep costs down
there has been a shift to using non-traditional workers. ‘Non-traditional workers include those
who hold multiple jobs, or who are “contingent” or “part-time” workers or people working in
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alternative work arrangement’ (Dessler, 2007). In order to hold multiple jobs, workers require
multiple skills and knowledge. There is a growing emphasis on knowledge workers and human
capital. Human capital refers to the knowledge, education, training skills and expertise of firm’s
workers (Dessler, 2007). These responses have increased the necessity for employers to make
more investments in skills training, to offer incentives to employees to improve their skills, and
for workers to take, upon themselves, some responsibility for their own development.
The impact globalization has made work more mobile, capable of being performed in different
parts of the world without the need to actually set up physical facilities in other countries.
Alternative work arrangements such as decreasing number of people working under 'permanent'
contracts of employment, and the proliferation of other types of work arrangements such as part-
time and temporary work, work from home and online jobs are practiced by most of the
organization worldwide. Thus, traditional HR has been challenged to accommodate different
types of employment contracts, and different types of pay systems to reward performance and
skills.
Technological Advances
Rapid development in technology has affected human resource management worldwide. Even
factory jobs are demanding more technological skills, for example knowledge intensive high tech
manufacturing in industries as aerospace, computers, telecommunication etc. Therefore, every
industry requires highly skilled workers with good knowledge in related technologies.
Information technology has changed the way the human resource function handled in
organization. The information technology can save everyone’s time and expense once he or she
learns how to use it efficiently. Human Resource will be impacted more than any other
department. HR departments are harnessing technology to meet their goals to enhance efficiency
and reduce cost. Systems are being implemented in the organizations such as Human Resource
Information Systems (HRIS) that allow Human Resource Departments to enhance their
efficiency for transportation of data, enabling them to store, manage and analyze critical
employee data without requiring the user to actually maintain the data. Human Resource
Department must be a leader in the implementation of emerging technologies. HR face the
challenge of quickly applying the technology to the task of improving its own operations
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Off-shoring
Off-shoring refers to the exporting of jobs from developed countries to less developed countries
(Hollenbeck and Wright, 2006). Competitive pressures and the search for greater efficiencies are
also prompting the more employers to export jobs abroad. Most of the countries exporting high-
paying service jobs to other countries, only export the work can be done at a lower cost. An
example is USA exporting jobs to India particularly in information technology. The company
that off-shore the work, enjoys the benefit of lower costs because the wages in developing
countries is far lower than that of developed countries. The workers in the developing countries
get employment. Developing countries get access to the latest technology. When exporting jobs
into low-cost countries they increasingly affect also bring about competitiveness with other
organizations and strategic HRM options worldwide. One of the vivid examples is that, The
Shanghai Automotive Industry Corporation (SAIC) is one of the oldest and largest automotive
companies. The company has 50 manufacturing plants in China producing autos, motorcycles,
trucks, busses and automobile parts for both wholesale and retail. The company is also involved
in car leasing and financing. SAIC has had highly successful joint ventures with General Motors
(GM) and Volkswagen to produce GM and VW automobiles for the growing Chinese
automobile market. The majority of SAIC’s sales in the 1990’s and 2000’s have come from these
joint ventures. In fact, driving in any major city in China shows the popularity of the GM and
VW autos in that country. Yet, some analysts believe that GM and VW may have become too
dependent on SAIC.
SAIC also owns almost 51 percent of the Korean automaker SSangyong also which is marketed
in Sri Lanka. SSangyong stretchers further by allowing their vehicles to be assembled in Sri
Lanka for the local market to maximise profits by cutting down on duties etc.. This in short
relates to the trend of globalization.
Best Practices
Impact of globalization on HRM may come via the opening up and penetration of economies to
external forces and influences. This may be two-way, with both indigenous and 'foreign'
multinational enterprise (MNE) operations and investment leading to exposure to other countries'
HRM practices, greater publicity and even direct importation. For the universal approach there is
a set of 'best practices' that have additive and generalizable effects on performance. Furthermore,
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'best practice' used by MNE can be transferred globally. Here benchmarking is seen as useful
with its implicit assumption that 'best practice' effects are not firm specific, but rather universal
and transferable. Without benchmarking, firms may be at a competitive disadvantage and HRM
practices cannot be copied easily; hence they result in sustained competitive advantage (Bae and
Rowley, 2001). In order to manage employees for competitive edge in a period of globalization,
human resource personnel must possess competencies relevant for effective implementation of
such strategic HRM policies and practices.
Demographic Factors
As a result of globalization, the workforces of many organizations are more diversified, which
includes women, minorities, disabled workers and immigrants. Therefore, another factor that HR
needed to be concerned about is – the successful management of a diversified workforce. To
manage a diverse workforce, managers must develop a new set of skills, including:
communicating effectively with employees from a wide variety of cultural backgrounds.
Coaching and developing employees of different ages, educational backgrounds, ethnicity,
physical ability, and race; providing performance feedback that is based on objective outcomes;
creating a work environment that makes it comfortable for employees of all backgrounds to be
creative and innovative (Hollenbeck and Wright, 2006).
• HR policies cohere both across policy areas and across hierarchies; and
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• HR practices are adjusted, accepted, and used by line managers and employees as part of
their everyday work. SHRM practices are macro-oriented, proactive and long term
focused in nature; views human resources as assets or investments not expenses;
implementation of SHRM practices bears linkage to organizational performance; and
focusing on the alignment of human resources with firm strategy as a means of gaining
competitive advantage.
The global business environment today is a multi-cultural one. While general business
considerations are essentially the same the world over, business styles differ greatly from country
to country. What is customary and appropriate in one country may be considered unusual or even
offensive in another. The increasingly competitive environment calls for an individual approach
to each national market. The success of any venture outside the home market depends largely
upon preparation and training within the company. Thus due to globalization HRM has to be
more dynamic in terms of recruiting, training and developing the employees to assure that they
can function effectively anywhere around the world. And meet the new challenges faced every
day.
While general business considerations are essentially the same the world over, business styles
differ greatly from country to country. An employee may be well equipped, trained and ready to
face the situation, but he acts according to the challenges and the requirement of the situation as
it comes. Globalization of business has increased the international competition rapidly. The
organizations of today have become increasingly heterogeneous due to globalization. Some
actually welcome change and the opportunities it presents, while others are reluctant to give up
familiar ways of doing things. The human resource or the workers are proactive in finding out
what skills and qualifications will be required to be an employee of demand in the coming
situations. Thus globalization has increased the requirement of skill among employees and
managers drastically. Thus we have no doubt that the roles of HRM have been affected largely
by the globalization. Human resources manager of today must ensure that the appropriate mix of
employees in terms of knowledge, skills and cultural adaptability is available to handle the
global assignments.
Globalization
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Industries typically refer to “Globalization” when talking about the overall process, and
“Internationalization” when describing the development of a culture-independent/world-ready
application. The above model is the most accepted.
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Business-related competence refers to the amount of business experience HR personnel have had
outside the functional HR specialty. These capabilities should facilitate the selection and
implementation of HRM policies and practices that fit the unique characteristics of a firm
including its size, strategy, structure, and culture .In other words, these competencies will enable
the HR staff to know the company's business and understand its economic and financial
capabilities necessary for making logical decisions that support the company's strategic plan
based on the most accurate information possible.
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environment that changes day to day, hour to hour. To remain competitive in such a dynamic
environment, businesses must continually improve their human resource management systems
and organizational changes. Addressing the most important and reliable resource, which is
human resource management is necessary step towards facing the challenges of globalization.
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examining the nature of cultural differences and national or regional conflicts and
problems; and
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Conclusion
Globalization has increased the connectivity and interdependence of the world's markets and
business. Globalization has its positive side as well as its negative side. It affects the economic
dimensions; that is trade, finance, aid, migration and ideas. Increase in these dimensions of
globalization, if managed in a way that supports development in all countries, influences
organizations that compete for customers with high expectations for performance, quality and
cost. With the acceleration of globalization, organizations have had to change and new trends
have set in, even in the management of human resources. Globalization also exerts pressure on
Human Resource Management (HRM) function to adapt to organizational needs and add greater
value. Globalization has affected the human resource management in terms of nature of work,
technological advances, exporting jobs, best practices and demographic factors.
References
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