How is the HRM function of multinational companies organised and what Essay

How is the HRM function of multinational companies organised and what are the specific issues of imternational HRM for multinati - Essay Example The MNCs play a significant role in the process of international trade as they play the main vehicle by which the maximum amount of goods and services penetrate around the world and they are â€Å"the principal agents of internationalization of the world† (Ferner, 1994). The study of the Human Resource Management in the context of the multinational corporations needs no justification as according to United States 73 million people were employed by the MNCs in the year 1994 which represents almost 20% of the employment in the industrial sector worldwide. Moreover almost 40% of the working population depends indirectly on the MNCs for employment. As these companies employ people of different countries with different cultural economical and social backgrounds, the strategies, policies and practices concerning with the Human Resource Management of these companies are perhaps the most complicated among all managerial works. The larger the company will be in terms of the exposure an d geographical reach the more will be the number of the employees of the company and hence more complicated will be its management .An effective human resource management is very necessary in order to gain competitive advantages in the market as the MNCs compete to capture the market share of countries. (Tayeb, 2005, pp. 4-5; Noe, Hollenbeck, Gerhart, & Wright, 2005) Organization Human Resource Management System in a MNC Human resource management involves achieving goals of the company through management of the employees of the company and is essentially the invention of the Americans. HRM system is based on the assumption that all personnel activities of the employees are integrated not only with each other but also strategically with the objectives of the organization as a whole and it is the function of the HRM to utilize this asset to the best use of the organization. HRM designs the management system to ensure human talent is effectively and efficiently used in order to meet th e goal of the organization. This system of management emerge because of the requirements of the companies and the labor market conditions prevailing in the country. The system of management gain importance mainly in the ‘non unionized companies’ of the country. With the success of the management in the country it becomes increasingly famous in other developed countries mainly the European nations as they adopt the system with changeable scales of success. (Tempel, 2001, pp.113-114) With the growth of a multinational company the workforce of the organization changes and hence the law and the needs of the company also changes. So the activities of the HRM need continuous change. HRM considers how the human resource contributes to the overall strategies of the companies and hence are implemented in regard to the overall strategy consideration of the company. Porter in 1985 divides the functioning of companies into two parts. First comes the primary activity which involves inbound and outbound logistics, marketing and sales activities and operations. The second part is the supportive activities of a company which includes infrastructure and technological development, procurement and HRM. This is because HRM along with the other supportive activities ensures the effectiveness and efficiency of the former activities. A fundamental question that often arises is whether a better HRM strategy creates more market value or the financially successful companies