The competition in business world is increasing rapidly over the years, making it unpredictable. Although, the manufacturing sector has realise and preserve its lead apart from becoming more inventive and resourceful. This can be fulfilled by implanting human resource management (HRM) practices which deals with asset of human resource. In operating a business, human resource is consider to be the most important element because the performance and outcome of the organisation such as monetary profit, is profoundly dependent upon the efficiency of the employees. Beside the magnitude and nature of the industry, employees’ decision and behaviour plays very crucial role in determining the success of the organisation (Hee & Jing, 2018). Therefore, many successful and popular organisations emphasis on the implementation of human resource practices to evaluate performance as the performance of the work force ultimately gets enhanced if the HR practices are developed. An organisation’s HR practice may give competitive leverage as the human resource is used to improve 4M which are money, methods, material, machine and money and the most importantly human resource differ from organisation to organisation making it distinctive and exceptional (Shaukat et al, 2015).
The has evolved a lot, from the era of oppressive and rigid governance and money-minded business management strategies to a more compassionate and human-focused attitude which look for better working efficiency in working force by developing and training them and permits better participation of line managers. Globalisation has touched every aspect of human life. The global working form has become essential phenomenon in multinational organisations (Reiche et al, 2018). Accomplishing work from across the border ensures better talent access and enhances efficiency of strategic resources usage (Cascio & Boudreau, 2016). Global human resourcing can be referred to the settings where the employees who are working together are from places which are geographically apart from each other and culturally diverse and therefore, rooted in diverse national background.
This globalisation is resulting into expansion of business to improve organisation’s functional and progressive flexibility and to achieve this the businesses are expanding their recruitment approaches beyond the borders of their nations. The search for skilled and talented human resource has evolved into international affair. This give rise to the bigger diversity amid the work force employed at the organisation internal and external to the nation. Furthermore, this arises the requirement to manage the difference between nations regarding institute and culture, to uplift the profit and productivity in balance with global competition. In Australia, the evolution of global HRM in manufacturing sector happened in following stages (Nankervis et al., 2019):
Stage 1 (1900-1940s) - Administration and welfare. Before World War 2, all the personal management tasks were conducted by line manager. These damage includes maintaining salary/wages record, employee’s welfare activity and minor disciplinary programs. In 1927, to promote the idea of industrial psychology and behavioural science in Australia, A. H. Martin established the Australian Institute of Industrial Psychology at Sydney University (Nankervis et al., 2019).
Stage 2 (1940-1970s) - Administration, welfare, recruitment and training, industrial relation and employee management and. During WW2, many labours went overseas to participate in war, which increased the scarcity of labour in the industries. After the war was over, returning soldiers with little working skills flooded the market. Employers focused on providing employee welfare to attract better skilled labours. Therefore, the employers now developed staffing, training and welfare programs and uses behavioural science and industry psychology to expand personnel functions (Nankervis et al., 2019).
Stage 3 (1970-1990s) – HRM and strategic human resource management was introduced. The business competition for Australian organisations with European, American and newly emerging Asian organisation turned turbulent and tough. The pressure to enhance the quality and achieve excellence lead to the development of HRM and SHRM (Nankervis et al., 2019).
Stage 4 (2000s) – Future development of SHRM. Although, it is difficult to predict the behaviour of SHRM in the future, it could be heavily influenced by theories and practices for globalisation. The HR will need to be more active regarding issues like work ethics, corporate governance, corporate social responsibilities, and management of workers’ welfare. Latest information and communication strategy will be an integral part of the SHRM (Nankervis et al., 2019).
The Australian industry witnessed significant changes in industry structure in past few decades. It was observed that the manufacturing sector was the biggest employer since the beginning of 1980s, although health sector demonstrated most noteworthy growth. Australia’s agriculture, information and communication, technology sector also grow a lot in last three decades (Nankervis et al., 2019).
In recent years, two major steps prove to be significantly affected the labour market of Australia. The first one is revised Trans-Pacific Partnership (TPP2) which comprises of eleven nations (excluding the US) such as Australia, Canada, Japan, Chile, Brunei Darussalam, New Zealand, Mexico, Vietnam, Singapore, Peru and Malaysia. The other step is the establishment of ASEAN Economic Community (AEC) to facilitate ease in labour mobility and trade of the region. There are ten member nations in AEC (excluding Australia); Malaysia, Indonesia, Singapore, the Philippines, Lao PDR, Thailand, Vietnam, Brunei Darussalam, Myanmar and Cambodia. These both advancement pose opportunities and potential challenges for the IHRM in organisations with global operation (Nankervis et al., 2019).
The development of human resource management lead to the existence of international human resource management. This is just an extension of the SHRM model which deals with the operation of international organisation such as Virgin, Tata, HSBC, IBM, Infosys, Lenovo, Hilton Hotels and other internet based organisation such as Google, Facebook, Alibaba, Amazon and Microsoft (Nankervis et al., 2019). The IHRM is based on such theories and practices that is feasible for businesses beyond boundaries and does not cause any conflicts.
The global HRM requires intercultural management. New joiners needs to get enthusiastic orientation to the culture of organisation. It is the responsibility of the managers to realise the changing aspects of cross cultural adaptation. The cross-cultural and intercultural management perception could be embedded with positive psychological approach which most functionally takes a sturdy progressive value base, solution-orientation and positive attitude towards intercultural management (Mayer, 2019a; Mayer et al, 2019). The intercultural managers need to analyse the viewpoint, beliefs and basic values of the employees and its influence of their problem solving strategies. The intercultural management and communication can be learnt by experience combined with cross-cultural management principles.
The other effect of global HRM in business environment is that the shrinking of product life cycle. Previously, those products and services which took months to happen is now happening at much rapid speed. The consumer wants their requirements to be fulfilled in as less time as possible. In this high paced global demand, decision must be taken instantaneously in real time which requires immediate communication between businesses situated in various nations and accessing all the required knowledge and information to make a sound decision.
To effectively manage human resource globally, it is essential to establish effective communication. To inspire, enable, organize, deploy, measure, reward the worthy productive outcome, effective communication must be established between top management and different work unit situated in various countries and within different cultural setting. Managers can effectively communicate with the workforce only by clear understanding of culture diversity and value-system of between different nations.
To standardize human resource management ISO 30400 was introduced worldwide in 2016 by international organisation standard. The ISO 30400 encompasses standards for HRM that is globally accepted and includes recommendations and standards for organisations to implement human resource in such a manner that is focused, consistent and comparable. A broad variety of HR processes and practices are covered in this standard such as recruitment, staff planning and HR metrics (Ulfsdotter Eriksson, 2017).
There are many challenges in executing global HRM in manufacturing sector. Some of the factors that affects global HRM is shown in the figure below:
Agarwal & Qouyatahi, 2018 conducted a survey to evaluate the challenges faced by the HR while conducting global human resourcing. The result is as follow:
One such challenge is recruitment. Recruitment of new and skilled workforce is very critical in determining the success of the organisation. However, the manufacturing sector is still facing deeply rooted issues with recruiting due to societal perspective. For example, if any position of highly skilled civil engineers with particular specialisation is vacant, the vacant positions integrally restrict the number of eligible candidates. This issue if further worsen by poor budget of recruitment and less focus on college recruitment. The manufacturing sector is not most dynamic when it comes to fill its recognised workforce capitals. For recruiting employees from other nations, the organisation need more budget and better exposure to find the talent. To combat the recruitment challenge, the organisations can adopt strategy driven by international market research. The recruitment process has been easy by using social media platform and professional networking online. It is the responsibility of the organisation to ensure the proper proportion of employees is hired and maintained (Bradley, 2017).
Apart from this other challenges in global HRM in manufacturing sector are employee retention, global competition, training and development and decline in workforce. The employee retention is mainly because of employees leaving the job for better and exciting opportunities. Another reason for employee turn overrate is due to no or less personal and professional growth and development, poor working environment, low salary package and lack of benefits and bonus.
The increased global competition made the task of recruitment more difficult as there are many companies in the market targeting to hire brilliant talents and innovators. It is becomes a challenge to develop and survive in this cut throat competition without productive and well skilled workforce as the manufacturing sector depends a lot on skilled personnel. After recruiting employees it is essential to train them and develop their skills. The manufacturing sector demands constant upgrade with latest technique and skills, therefore employees need to be trained regularly to develop the organisation and prepare them to tackle any challenge. Although, manufacturing sectors seems to be growing, this is creating continuous demand of skilled work force which is creating shortage of skilled talents. However, the salary in manufacturing sector is comparatively higher as compare to any other industry, it is still not able to attract better talent.
Politics and demography also have significant effect on the global HRM (Nankervis et al., 2019). For example, replacement of President Barack Obama with President Donald Trump, the exiting of the United Kingdom from European Union (EU) also known as Brexit, unstable leadership in countries like Egypt, Australia, Germany, war tension between countries like China and India create challenge in implementing ideal global HRM . The demographic factor such as over aged workforce in countries like Australia, Japan, the US, UK, New Zealand and Canada and young workforce in countries like India and Indonesia. The countries with ageing workforce requires young and skilled labour, therefore, developing countries such as India and Indonesia provide good market for skilled and talented personnel.
To understand the effect of challenges and opportunity, here is an example of global HRM in China. China is well known for its dynamic foreign direct investment (FDI) policies. Since 2009, China’s international business has surged by massive 44% making it $183 billion according to the World Investment Report, 2017 (Nankervis et al., 2019). The merger and acquisition (M&Q) purchase by Chinese organisations was predicted to reach $297.1 billion in 2019 (Nankervis et al., 2019). It is obvious that this massive international dealing forced China to develop more active, sustainable and inclusive economic policies for the globalisation process. In 2015, a report on overseas sustainability of Chinese enterprise revealed that only 13% of the organisation in China is actually gaining sustainable profit, on the other 24% companies are in loss. The main reason behind this was said to be clash between cultures due to lack of cultural integration.
The demand for talent also plays a major role in determining the success of the global HRM. Most of the countries wants to hire ‘optimal talent’, rather than ‘suboptimal talent’ (Nankervis et al., 2019). The optimal talent are those workforce who are brilliantly skilled, although they are very rare to find. The suboptimal talents are those workforce who are partially skilled and their skill can be further developed. Most Chinese and Western companies often ignores suboptimal talents in order to find the best workforce. Often the suboptimal talents fails to meet certain selection criteria that changes from culture to culture. For example; in the western countries, talking loudly in public area is consider bad manner but speaking loudly in China indicates cheerful, friendly and enthusiastic nature. Hence, knowledge of culture is very crucial in for international labour force also. Possibly, the suboptimal talents can be trained and developed to meet the criteria by proper execution of the global HRM.
can be concluded that the global HRM could be possible strategic human resource management technique which will be implemented by most of the organisations throughout the globe. The borders for workforce will be blurred. Although there are many challenges such as recruitment process, cultural knowledge, talent search, politics and demography, the opportunities are no less. With the support of various programs and formation of committees such as AEC, TPP-2, International Standard Organisation, the global HRM has been made more dynamic and sustainable.
Agarwal, S., & Al Qouyatahi, K. M. S. (2018). HRM Challenges in the Age of Globalisation. International Research Journal of Business Studies, 10(2), 89-98.
Bradley, J. (2017). s. Retrieved on May 12, 2017 from http:// smallbusiness.chron.com: http://smallbusiness.chron.com/effects-globalization-human-resources-management-61611. html.
Cascio, W. F., & Boudreau, J. W. 2016. The search for global competence: From international HR to talent management. Journal of World Business, 51: 103-114.
Hee, O. C., & Jing, K. R. (2018). The Influence of human resource management practices on employee performance in the manufacturing sector in Malaysia. International Journal of Human Resource Studies , Volume 8, pp 129-147
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Ulfsdotter Eriksson, Y. (2017). Global HRM standards as boundary objects: a device to enhance legitimacy and status. Personnel Review, 46(6), 1089–1103.doi:10.1108/pr-01-2016-0013
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