Multinational Companies MNC

Multinational Companies MNCMultinational Companies MNC1 IntroductionOver the away couple of years Multinational Companies (MNC) had to face a number of new challenges in their daily disdain. ball-shapedization changed numerous things for spherical players. nomally the social structure of a typical MNC shows a cogitate on their main resources and departments like finance, technology, securities indus showing, sales and production. This is because they want to agree a self-aggrandizing number of customers and as hale as want to install a practised profit.But if they neglect these new challenges coming up with the worldwideization they might not be successful any more than (Mendenhall et al., 2003). A uncollectible challenge MNCs wealthy person to manage is their hands diversity (Stern, S. 2008). novelty means any sort of difference between two or more hatful.These differences might exist in terms of age, gender, race, education, social status and other terms. To man age this diversity MNCs get to implement strategies that knit all employees in concert into a dynamic workforce (Miller, Dollar, 1950).Because of this enormous diversity one of the key success factors of MNCs is the recruitment and selection of labor who go game valuable individuality. These individuals argon forming the value and beliefs of an arrangement (Mullins, 2007).The counseling of this diversity is a challenge of the military man resource concern. In this paper I will focus on how MNCs drop improve their HRM and make their caller- turn out staying successful in terms of managing diversity. It is gravid to become a major player in the planetary market without an effective HRM.There ar two major challenges within global HRM namely progress toing global embodied cultures and developing global leaders that get down to be mastered in order to manage diversity and be successful in the global business environment (Mendenhall et al., 2003).2 Enhancing global busines s dodge Today more and more companies expand their activity outside(a)ly or are al pull in an existent global participant. This requires new strategies. The HRM piece of tail play a lot to the success of an enterprise, if it adopts a truly globalize strategy in alignment with the corporate strategy (Mellahi et al, 2003).2.1 Tasks of an international HRM The human resource management has to establish processes and policies which enable people to learn new skills required to compete successfully in a global business environment. A truly international HRM in like manner involves the ability to move people easily from country to country. As companies become more global, they command talented managers with global experience.These people also need assistance in building international projection forces and teams. Managing the administrative details associated with international assignments beyond the recruiting process is a complex issue. Therefore a honest dealledge of the cultura l differences and thinkable barriers is necessary (Holbeche, 2004).Human resource management needs to develop the policies, the processes and administrative agendas which have to become standardized and implemented in all locations. Though practices may differ between countries, a familiarity needs some parking area standards across its subsidiaries that are strategically aligned with the organizations mission, for practice session a worldwide standard for senior management in evaluation, compensation and development. With this HR the organization can create social capital in authoriseically adaptive ways and serve as a buffer between globalization and topical anaestheticization of strategic practices (Gomez et al., 2005).A corporation that is in the lead in implementing and creating a global HRM and is capable of all these tasks can develop a strategic resource, which is hard and expensive to imitate quickly.2.2 The mission of international HRMWhen a caller-up decides to go global, it does so to create unique competitive advantages, that is not possible in the domestic market. Therefore it has to adapt its strategy to define the new goals and the measures to gibe them. Business strategies, which organizations adopt to maintain competitiveness, should be developed in conjunction with their human resource departments (Lengnick-Hall et. al 1988 Schuler et. al, 1984 Tichy et. al 1982). It is quite clear that the change from topical anaesthetic to global has an wallop on the techniques used in human resources management.By implementing HR issues in the mission, this will help enhancing the global business strategy. The mission can be defined as the reason why organizations exist. The purpose of an organization is the heart of the mission, but it is also made up by organizational beliefs, values and business definition (De Wit et al. 2004).To be strategic, human resource practices are expected to maximize employees effectiveness in accordance with their organizations missions, objectives and goals (Lengnick-Hall et al. 1988 Schuler et al. 1984 Tichy et al. 1982).When the mission is consistent and oblige to the employees, it can be a source of motivation and create an emotional bond between the members of the organization, which again can result in better surgical operation tied up to the mission (De Wit et al. 2004).In a global organization, it is harder to create a mission that ties together people from more various part of the world, and it is at that placefore crucial in creating a global mission, to consult and integrate HR issues into it.There are very different ways in businesses virtually the world in handling HRM, and therefore in trying to decrease the differences between domestic and international HR, it can help make the subsidiaries to work towards the corresponding goals. The mission outlines the fundamental principles guiding strategic choices, and if it has guidelines on how to handle different HR issues, th e different subsidiaries will use a somewhat similar HR management.To be able to integrate HR with global strategy development and implementation, senior members and top management of the organization need to promote HR issues, and try to address them in the development and implementation stage (Mendenhall et al. 2003).Collaboration among employees in MNCsEmployee sort is perhaps the most critical challenge that multinational organizations have to deal with (Bartlett Ghoshal, 1990). In Multinational Companies there is a huge potential of conflicts, because of its diverse individual(prenominal)ities. As a consequence of this tensions will arise among employees.Although these tensions are inseparable to MNC and also desirable (Kilmann, 1985), they require increased levels of collaboration. An organization must(prenominal) therefore enable their employees to accept the tension and conduct as one company.Nevertheless, in many large and multinational companies, employees tend to be silo-focused. They view their membership and loyalty as belonging to a certain subunit in the organization. Consequently they behave in a manner that benefits their subunit but could be detrimental to the organization as a unit. This kind of thinking of course leads to a higher(prenominal) effort of coordinating and collaborating employees to have a successful organization (Joyce, 1986).Many problems can arise out of the silo-focused way of thinking. Collaboration between units is hindered by personal conflicts between unit leaders, resources might be withholded from each other and insufficient communication between different units leads to a lack of trust in the whole organization. According to Sy DAnnunzio (2005), there are two major reasons for silo-focused behaviors.First, most employees reside in the same function (and often the same unit within the function), throughout their careers. They always work with the same people and probably never had the chance to work with other elements of the organization. Second, MNCs with complex structures require a higher stagecoach of collaboration, compared to small companies with simple line structures. Mostly, employees have not developed the necessary social skills for this high degree of collaboration.Often, the command and control thinking in traditionalistic hierarchical organizations is simply turned over in complex MNCs, where it is predestined to fail. Therefore, possible measures to mitigate silo-focused behavior are providing trainings for social skills, defining clear expectations for behavior in the organization, working across functions to learn about different points of view and most substantially building relationships between employees of different units (Sy DAnnunzio, 2005).Diversity in MNCsAs a multinational company works in a global market it must be prepared to detect all possible changes in the global environment and it has to be able to communicate and adapt the identity of the company to them (Ali Camp, 1996).4.1 Cultural diversity Nowadays cultural diversity plays an crucial role in a company. The criteria discriminating these groups include race, geographic origin, ethnicity, gender, age, functional or educational background, physical and cognitive capability, language, lifestyles, beliefs, cultural background, economic category, tenure with the organization and sexual preference (Seyman, 2006).The company cant offer quality products or services to the customers if it doesnt understand and sequester in account the impact that the culture has in all the processes (Maddock, Lois Viton, 2008). Workers usually think that their behavior hasnt got any influence on the final product or service, but to be effective, every part must have a clear vision of the company and a clear mission on it.The social, political and enterprise structure depends on everyone in the company, so the internal area and the human resources, one of the most important areas of a company, must be developed with the rest of the company to achieve their goals (Seyman, 2006).The misunderstanding and ignoring of different cultures, language and historical background lead to disasters in the field of setting up multinational business. To avoid this, a frequent knowledge of another nations culture and history is essential. So general cultural knowledge, if coupled with prejudice and prejudgment, is an obstacle to effective global management (Ali Camp, 1996).4.2 Communication and language barriers One important challenge beneath culture is language barriers. Communication is essential for management. Yet communication relies upon a shared language, a pre-requisite that does not exist in many international business situations and that is when the problems start. The most pronounced manifestation of the language barrier at work can be found in the relationship between a multinational parent company and its network of international subsidiaries.Several factors contribute to the d ifficulty of achieving and sustaining effective communication theory and a productive, collaborative relationship. Even if an employee is relatively competent in the language of the other party, loss of rhetorical skills is always present as the use of humor, symbolism, sensitivity, negotiation, impression and motivation requires a very high level of fluency (Harzing Feely, 2008).5 Managing diversity in MNCs through HRMTo manage workforce diversity in MNCs its a challenge for the human resource management to establish a global corporate culture. To identify with the corporate culture of the company is the most important thing for the staff. That is why building a global corporate culture is one of the most important challenges for Multinational Companies.But also the management in MNCs has been changing. There is a need for global leaders. The formation of such global leaders is also a part of the human resource management.5.1 Need for global corporate cultureThe situation within global enterprises has been changing for many years. According to the cheap labor in east world and other factors, there has never been such a need for understanding the different cultures in multinational companies (Crocket, 2003).Cultural empathy, integrity, and comfortability in dealing with people from various cultures, along with effective performance, highlight the necessity to think and act in relevant cultural terms. This does not mean that todays managers must know in detail the cultural and historical backgrounds of other nations. Rather, it means that global managers need to think and act with an brusk mind and in socially responsive ways to events at home and abroad (Ali Camp, 1996)To be able to work efficiently in the global market and industry it is very important to build a corporate business culture. A corporate culture can be explained by convening several different cultures represented by numerous different workers, working in a Multinational enterprise (Menden hall, et. al., 2003). As the word Multinational enterprise already expresses that the company is acting global, it is common that numerous different people with different cultures are working for this company (Stern, 2008).Furthermore every culture has its own methods, values, beliefs, habits, language and so on. Organizations acting global can never work without interference of the leader board to create a global corporate culture. That is why a Multinational company has to offer corporate values, beliefs, methods, habits and working processes all set in the global corporate culture.Of course it is necessary to respect local cultures because if an organization does not respect the local cultures, workers will not be satisfied and can never identify with the company they are working for (Mendenhall, et. al., 2003).In former times there was the so called colonialism style of leading people. Colonialism can be understood as the control of overseas colonies by imperial powers. A foreig n power rules a large group of people and the foreign power uses the colony for wealth and has more advanced technology than the people of the colonies (Glossary, 2005). In other words the headquarters and the top management delegated the work to their staff and controlled the output. This is not possible anymore.They have to create clear global corporate values. These corporate values assist to improve workforce and working processes as the staff all over the world can identify with the vision and values, the corporate culture, of the headquarters and all other subsidiaries (Reggie, Fabish, McGaw, 2005).The global corporate culture should assist to create a standardized culture with respecting local cultures so that the Multinational Company has a unique and corporate appearance to the outside. This global corporate culture should be written down with all its values, certain behaviors towards customers, suppliers, stake- and shareholders, its working processes, communication method s and team forming habits (Lotti, Mensing, Valenti, 2006).A very interesting article states that there has to be paid much attention with forming cooperation concerning the global corporate culture. It says that the company cannot be global until its board of directors does not reflect the countries and regions in which it operates. The board of directors has to focus on regarding and respecting all cultures convened in one company. All these different criteria of all convened cultures have to be capable to fit in the companys global corporate culture (Nair Chandran, 2006).Accenture made a survey within 900 C-suite executives in the U. S., the UK, France, Germany, Italy, Spain, Japan, Canada and China. These executives were asked to identify the greatest challenges with building global companies. another(prenominal) thing Accenture wanted to know from these executives, was if there is a receipt how a Multinational company can succeed in the increasingly global market.The result to this question was that they found out that their chief concern is the ability to maintain a common corporate culture around the world. It means that half of the respondent executives believe that their companies are ready to succeed in this increasingly global market. It became very important that Multinational companies maintain their core values and their corporate identity across many cultures.Another thing getting very important is that the industry becomes knowledge based. Important as well is to understand local customs and ways of doing business in certain countries. A Multinational company needs the ability to service clients and customers effectively. Therefore they have to learn numerous things about how to deal with foreign countries and their cultures in front they start to set up a global corporate culture in their company (Foster Mark, n. d.).5.2 Developing global leadersThe implication of managers has changed during the time. In a constantly changing world it is imp ortant to develop global leaders. Nowadays business works on a bigger field, within more different cultures than years ago. The more companies pursue global strategies, the more global leaders they need. How to find and train future global leaders has become a task for the human rescores management in global companies (Allen, 2000).5.3 Why global leaders?It is important for the whole company that the leaders and the team of executives have the cover skills and take the right decisions. The leaders should have global experience. If they do not have international experience they risk handling their work tasks incorrect. They will also have problems to communicate with their new employees from other cultures. Global leaders have to read their market right. This means that it is impossible to sell the same thing, the same way in different countries.There are different requirements that have to be profiled. So human resource management has to be adjusted to the countries they are workin g in. leadership models have to differ because the importance of variables as relationships, short-term profits, hierarchies, ethics, and risk are different from culture to culture (Hofstede, 1994).The book Cultural Dimensions of outside(a) Mergers and Acquisitions shows that leaders build structure and control mechanisms based on their personal experiences and their national culture. Because they have such a big influence on the companys strategy it is important that companies have good educated global leaders.Otherwise they might not be acclimatized to the global environment. The way to control a firm in France might not be the same way to control it in China. This example points out very clear that the way of leadership has to be adapted to local markets (Cardel et. al, 1998).5.4 How to form a global leader?Some requirements for global leaders are that they have to be flexible, bold and ethnocentric. They should also have the right background, which should feature an early int ernational experience. This means for example an education from an international school with exchange programs and different teaching languages.On the other hand there are statistics showing that 50% of the learning how to be a global leader takes place though work experience, 30% through interpersonal relationships with bosses, peers, subordinates and superior contacts and only 20 % through formal education and training. This statistics can be interpreted in ways that through the right training on the job, intimately every manager can become a global leader (Lobel, 2007).How the company develops global leaders is very important for the companys success, because 80% of their education take place on the job and not through earlier education. Aside from the development of global leaders it is for sure that global leaders are very important for companies because when a company enters a new market, the leader has to be keen to know what employees in the new country are needed to be ab le to compete in this market. They have to balance global integration with the local responsibility (Mendenhall et. al 2003).Global leaders have to learn themselves to integrate into a different social system. It is apparent that it is hard to find individuals that have all the right requirements to be good global leaders. leading should try to develop a global mindset. This means that they should be open minded, flexible and not egocentric.A very radical approach to encourage the open mind of global leaders is to abandon managers with homeless people. After such an experience leaders are usually less selfish and more open to other life styles and cultures. A less radical method to encourage a global mindset is the establishment of cross-border teams or projects (Mendenhall et. al 2003).6 destinationIn a growing global market companies tend to meet challenges if they do not focus on developing their HRM. It is hard to see the pecuniary gaining of HRM and therefore many companies tend to focus on other aspects that are easier to measure and see the results of. But when operating in a global market with subsidiaries all around the world, the focus on HRM is crucial in creating a united company that works towards the same goals and visions. This is not possible without a well developed HRM strategy.A big challenge of HRM is building a global corporate culture. This means that the mother company needs to set corporate values, beliefs, programs, structures and rules. On the one side, it should help the company to deliver a corporate view of the company to the public. On the other side, it should help the staff working for the multinational company in the whole world to easily identify with the company with the help of the global corporate culture.The main issue of the next challenge of HRM is to find good global leaders, this because they affect the whole companys opportunity to expand globally. The managers are the ones that make decisions about activity in the new global areas. Is hard to develop good global leaders, and the HRM has problems to find effective education for them. The leaders not only have to have the right education but also the right background, to become successful.All in all, focusing on only one of these prospective is not sufficient enough as they are tie in together. MNCs have to work on all of them to get a more effective HRM and a possible competitive advantage through this. HRM can be a tool to make the subsidiaries feel like a part of the global company, and work towards the same goals.BibliographyBusiness JournalsAli, A. J., Camp, R. C. (1996). Global managers qualities for effective competition. International Journal of Manpower, 17 (6/7), 5-18Gomez, C., Sanchez, J. I. (2005). HRs strategic role within MNCs helping build social capital in Latin America. International Journal of Human alternative Management. Vol. 16, Issue 12Harzing, A., Feely, A. J. (2008). The language barrier and its implications for HQ subsidiary relationships. Cross Cultural Management An International Journal , 15 (1), 49-61Joyce, W. (1986). Matrix organization a social experiemet. Academy of management journal, 29, 536-561Lengnick-Hall, C. A. and Lengnick-Hall, M. L. (1988) Strategic Human Resource Management A Review of the Literature and a Proposed Typology. Academy of Management Review. Vol. 13, pp. 454-70Lobel, S. (2007). 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