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Human Resource Management Issues
Types of Human Resource Management Issues in International Business
Companies are now venturing into cross-border markets for various reasons. Common motivations include profit advantages, tax benefits, and economies of scale. Nonetheless, issues such as cultural differences, economic factors, staffing policies, and labor relations may pose a challenge to managers (Bennett, 2004).
People have different ways of life across the world. Practices that are considered ethical in one culture may be seen as immoral in others. For instance, maintaining eye contact while speaking with another person may communicate interest and attentiveness in western cultures. In contrast, it may be perceived as rudeness in Asian cultures. For this reason, international managers need to study and understand the local culture so as to develop appropriate management practices.
Another pertinent aspect of culture is individualism or collectivism. In cultures where collectivism is common, such as Japan, group decision-making is given a high priority, as opposed to individual decision-making (Bennett, 2004). Cooperation is valued more than individual initiative and efforts. In individualistic cultures like in America, emphasis is placed on individual effort and initiative.
Factors such as inflation, interest rates, and gross domestic product determine human resource practices in various countries. For instance, unfavorable market conditions may lead to human resource practices like staff cutting and hiring efficient workers so as to maintain profits (Prentice Hall, n.d.).
Labor relations greatly influence human resource practices in international settings. An example is the variation in the number of hours, and days worked vary across countries. For instance, workers in Portugal work for 1980 hours per annum while those in Germany work for 1648 hours (Prentice Hall, n.d.).
Different companies develop staffing policies depending on prevailing influences from the host or home-country. Some companies may use more nationals, because it is much cheaper than hiring expatriates. In other cases, local governments may require companies to hire a particular percentage of locals.
Types of Staffing Policy Approaches in International Human Resources Management
Even though there are some common traits that all managers need to have, such as technical skills, other factors like cultural competence and government policies come into play to determine the staffing policy a company will choose for international businesses. The three main staffing policy approaches are ethnocentric, polycentric, and geocentric (Prentice Hall, n.d.).
In ethnocentric staffing policy, home-country personnel fill key management positions. This approach is usually taken when the host-countrys personnel may not offer knowledge, expertise, or the management style that the company is looking for.
In polycentric staffing policy, host-country personnel occupy key management positions while home-country personnel occupy key management positions at the head quarters. This approach is usually taken when there is a belief that host-country managers better understand the culture and behavior of the local market than home-country managers (Prentice Hall, n.d.). This approach is also cheaper as expatriates cost a company more than locals.
In the geocentric staffing policy, the best people for key positions in the company are searched globally, without consideration of the country of origin. This approach is becoming more popular than ethnocentric and polycentric staffing policies since it ensures that a company uses human resources more efficiently (Prentice Hall, n.d).
The Expatriate Management Policy in Human Resources Management Based on the United Arab Emirates
Like most others Gulf Cooperation Council countries, the United Arab Emirates (UAE) experienced robust economic growth due to financing from oil revenues. Nevertheless, shortage of labor meant that the country had to rely on foreign workers to support the rapid development of infrastructure and provision of public goods. The influx of foreign workers rose to the extent that their percentage in the UAE workforce was higher than that of locals. According to Randeree (2009), it occurred because foreign workers, especially those from India, were ready to work under difficult conditions for longer hours, and they demanded lower pay.
Since the early 1990s, the UAE government has been trying to nationalize the countrys human resource a move aimed at increasing the number of locals in the workforce. However, actualizing the policy, referred to as Emiratisation, has been a challenge because of issues like demographic imbalance, gender inequality, and poor training among nationals.
To overcome the challenge of poor training among nationals, the UAE government instituted training and development programs. It also put in place policies to check the influx of foreign nationals into the workforce. Another measure that the government instituted in order to ensure that companies adhere to the emiratisation policy is levying fines. In 2005, the Ministry of Labor collected fines amounting to US$41.35 million (Randeree, 2009). Funds collected from the fines are channeled towards training nationals to acquire skills and competencies in various professions.
The Al Bawaba Emiratisation Programme is one of the initiatives meant to help nationalize the UAE workforce. According to Randeree (2009), this initiative promotes emiratisation of hotel, tourism, and catering industries. It involves schemes to transmit skills and knowledge from expatriates to UAE employees. Other programs instituted to help realize the emiratisation objective include the Maharat, Emaar leadership, management associate, Afaq, and Tamheed training programs.
Human resource departments in the UAE have strict guidelines to ensure that UAE nationals, subject to qualification and skills, are given precedence when vacancies arise in any organization. This is especially in key managerial positions including human resource managers, personnel managers, and secretarial positions in private companies (Randeree, 2009). As a consequence, expatriates in UAE have high job insecurity and dissatisfaction.