Cover Memo

Date: 26/11/18

To

Panteli

Dear Panteli,

The attached report presents a study conducted on changing role of HRM in international business management. It was thereby important to conduct a detailed study in this direction and obtain necessary inputs. The report presents details discussion over the definition and meaning of international human resource management (IHRM) followed by the purpose and scope of the study.

 Further the results of the study are discussed to identify the need of critical-thinking and analytical decision-making skills in the field of IHRM and the ways in which knowledge and skills of change management and cultural transformation ensures efficient business operations in the international business environment

The study is based on one primary source and two secondary resources. Here the primary research conducted through an HR executive as a primary source to conduct the interview and secondary sources include some key journal articles providing an overview of these HR issues. 

The study concludes that it is important to apply theoretical understanding with practical fields of organizational behavior, industrial relations and labor policies to take analytical decisions associated with cross-cultural environment of international business operations. Therefore, it is recommend that HR personnel working in the field of IHRM should take a balanced approach to analytical analysis and apply knowledge of cultural transformation to ensure stability and long-term viability of business in global environment. 

I would be further pleased to discuss this report and other conclusions as per your request. I also invite you to provide your views and response to the provided recommendations of the report.

Sincerely,

Email id: 

CHANGING ROLE OF HRM IN INTERNATIONAL BUSINESS MANAGEMENT

Executive Summary

Today, with extended challenges of globalization, the organizations are looking for revamping the major Human Resources (HR) practices in the organization. The current report is focused on two key research objectives of identifying the need of focusing on problem-solving and analytical decision making and the role of comprehensive knowledge and skills of change management and cultural transformation in the context of international business environment. 

The information collected from HR executive and secondary sources of information clarifies that HR personnel operating in international business environment should focus on detailed and critical analysis of every situation and possible decisions to understand the impact of such decisions on a multi-cultural workforce. Moreover, there is a need to link theories and concepts with actual scenarios to identify practical solutions to change management and cultural transformation in global context. 

The study concludes with listing of some key challenges related with IHRM like challenge of managing conflicts, ensuring proper and transparent communication, acceptable reward and performance management, cross-cultural diversity and ensuring application of ethical HRM strategies in link with overall organizational objectives and strategies. Therefore, it is recommended that HR personnel focus on:

• Taking broad and balanced approach to analytical analysis of available information on HRM to follow efficient decisions in global business environment
• Apply advanced analytical skills and knowledge of change management and cultural transformation to get an insight into present business, predict changes and make informed decisions at different levels.

Introduction

Defining the Chosen Field

The chosen field of study of international human resource management (IHRM) and the associated challenges faced by HR personnel while performing their role and responsibilities in global business environment. Considering the definition of IHRM, Boxall (1992) states that “International human resource management is concerned with the problem of human resources in multinational firms in foreign subsidiaries (like expatriate management), and more broadly associated with the HRM issues unfolding during different stages of the internationalization process.”

Here, it is to be noted that IHRM is not limited to basic HR functions of workforce management, selection of personnel, cross-cultural team members, etc. but should be considered in an extended form where management of all activities associated with human resource management are focused in relation to the application of global rule sets (McKeena and Richardson, 2014). 

In the global business environment, there are several unique challenges faced by human resource personnel due to the volatile nature of environment and managing people with a diverse background, values and beliefs. There are several issues and elements that differentiate domestic HRM with international HRM (Brewster et al., 2005). These issues include the impact of globalization, the influence of environment, cultural differences, the variation in HRM practices and work culture in different regions (convergent or divergent) and the strategies employed to manage expatriates (McKeena and Richardson, 2014). 

Introducing and Listing Two Questions

The two major research questions of this report are:

1. What is the need of focusing on problem-solving and analytical decision making skills for HR professionals?
2. How comprehensive knowledge and skills of change management and cultural transformation can improve overall business management?

Purpose of Research and interest for Year One Students

The key purpose of conducting this research is to offer insights in the IHRM practices to the HR professionals so that they can improve the work competencies of all the employees in a global organization. 

The study will be interesting for Year One students, as it will help them understand different ways in which HR personnel find it challenging to manage the workforce in international business environment as compared to domestic HRM. They will also find some practical ways of focusing on critical-thinking skills and identifying the unique strategies that proves to be successful in efficient IHRM. 

Defining the Scope of Report

The scope of the report will be limited to identifying the need of critical decision-making skills for HR personnel operating in international business environment. The study will also explore the way comprehensive knowledge and skills of change management and cultural transformation is necessary for the overall functioning of business in global context. 

However, the scope of this particular study will not move beyond the objectives and will not cover the complexities arising due to different cultures of various countries influencing the approach of employees towards their work.  

Results of the Study

Analytical and critical thinking skills are key to success in the field of international human resource management. An HR manager working in global business environment is expected to exercise sound judgment along with engaging in high-impact decision-making in several different fields (Brewster et al., 2005 and Yang, 2016). The skills of analyzing a situation and identify the implications of certain decisions from a critical perspective proves to be highly beneficial in the field of IHRM. As reported by the interviewed HR executive, there are instances where a decision is required to outsource some functions impacting some employees as well as the organization as a whole. The analytical decision-making also depends on proper integration of theoretical underpinnings in organization behavior while accounting for industrial relations and labor economics. 

The role of HRM is changed in international context where HR personnel work in the capacity of a strategic business partner, administrative expert, a change agent as well as a performance coach (Figure 1). Such changing role makes the work of IHRM much more challenging calling for a proper alignment of theory and practice to identify solutions to various problems in the areas of strategy, operations, processes and people management. 

Figure 1: Changing Role of HRM in International Business 

Source: Ulrich (1997), Human Resource Champions

The global business environment has made decision-making within the organizations more intricate and convoluted in nature. The mix of marginal workers and permanent workers has made the human resource being the source of sustained competitive advantage influencing the survival and profitability of organizations in global environment (Brewster et al., 2005). The interviewed HR executive explains that this makes problem-solving skills, critical analysis and analytical decision-making skills necessary to remain successful in IHRM while ensuring the mutual benefit of employees, organization and the host country as well. 

Now, these trends demand a focus on cultural transformation and change management where HR personnel is required to develop knowledge and skills to define appropriate corporate strategies, procedures, technologies to deal with the changes stemming from internal and external differences in the business environment (Gartrell, 2013). Here again the role of theoretical underpinnings is important that help HR personnel to gain knowledge to link various field of organizational behavior, conflict management, HR management, reward management, industrial policies and overall motivation and satisfaction of employees. 

It raises the challenge of gaining knowledge and awareness about cross-cultural elements influencing training and development, rewards, compensation, performance appraisal and motivation factors of employees. There are some key challenges and associated skill-set required to manage HR in an international business environment (Table 1). 

Table 1: Challenges Faced by International HRM personnel

Source: Self-prepared by Author based on inputs from interview

Further, the HR department needs to note that their practices will change with the change in the scope of working in a given environment. As shown below, the scope for the working practices wills immediate change and hence they need to revise their strategies accordingly (McKeena and Richardson, 2014). The following figure-2 demonstrates the variables that will identify the differences between Domestic HR and International HR in a given working environment.

Figure 2: Variables that will identify the change in working practices in Domestic HR and International HR

Source: Yang, D. (2016). Introduction to IHRM

Finally, the HR department is required to address the needs of the new culture, build a global mindset, ensure effective cross-cultural communication, and thereby build global teams that will exceed the expectations of the senior management (Gartrell, 2013). However, the senior management is also required to implement performance analysis mechanisms through which they will be analyzing the performance of the global teams and also of the new HR practices in the organization.

Conclusion 

The study clarifies the need of linking theory with practice in the field of IHRM to identify practical and successful ways of managing the challenges of global HRM. This information was surprising for me, as I was unaware of the practical application of theoretical underpinnings and learned concepts in relation to global business environment. 

The most important information is the link between cultural awareness and successful change management that can transform the way business operations and achieve success and stability in an international environment. This is important because managing change in an environment with diverse workforce and different cultural background can prove to be a big challenge affecting the overall competitive advantage gained by the organization. Moreover, knowledge of cultural transformation is necessary to avoid any unethical strategies affecting the overall profitability of the company in a global environment. 

All the information related to need of cultural transformation, change management and need of focusing on analytical skills is useful for first year students. This will help them link the theories and concepts that they are studying and learning with the practical scenarios in international business and ensure developing skills of critical thinking and analytical decision-making. They will be able to explore the interrelationship between HRM, organizational behavior, and industrial relations and labor policies while operating in different foreign countries. 

Recommendations

1. Focus on taking broad and balanced approach to analytical analysis of available information on HRM to follow efficient decisions in global business environment. Also, familiarize with local ways of working along with developing a global mindset with employees. 
2. Apply advanced analytical skills and knowledge of change management and cultural transformation to get an insight into present business, predict changes and make informed decisions at different levels.