Introduction to Globalization
Background to Globalization: International Business evolved from the age of World War I (1919) & World War II(1939 ) . The economies of several counties were down. Exports & imports were restricted due to unhealthy relations. Then the world war countries found the need of international cooperation in global trade. This lead to the formation of IMF( International Monetary Fund) & World Bank. The attempt of these advanced countries ended with the GATT( general Agreement of Trade & Tariffs) & gradually GATT was replaced by WTO(World Trade Organisation) in 1995.
Hence the efforts of IMF, World Bank & WTO lead to the globalization of business during 1990s.
Phase 1 – From export-import to International Marketing: Earlier organisations used to only export or import their products across nations. Later these organisations began their promotion in the countries where their products were in demand thus starting international marketing.
Phase 2 – From International Marketing to International Business: Since the demand of the products started increasing in the neighboring countries, it was becoming difficult for the producers to export at a larger rate hence they decided to manufacture their products in the countries where there is high demand. Eg: Uni lever established its subsidiary in India i.e HUL/HLL. Now HUL produces its product in India and markets them not only in India but to Bangladesh, Sri Lanka, Nepal etc. Thus began the International Business
- Doing business in more than one country
- Operating and expanding the business throughout the world
- Establishing manufacturing and distribution facilities in any part of the world
- Global organizational structures, organizational culture & strategies
Advantages & Disadvantages of Globalization
- Cheaper Products for Consumer: Mass production leads to availability of products at low price.
- Consumers get the product they want at more competitive prices.
- Consumers to get much wider variety of products to choose from.
- Globalization leads to Outsourcing in some cases which can increase of job in other countries. Eg: Moving call centers to India.
- The international barrier gets reduced between counties which fosters the relation among nations.
- Better qualities of products are available due to standard norms set for production across the globe.
- Helps prevent market saturation in a specific market i.e it reduces too much competition in one place. For e.g too much call centers were existing in UK market which moved to India
- Standardization of product: The same products can be seen in some many places – e.g coke and McDonalds
- Companies get access to much wider markets which give a scope of further development of organisations
- Increased Standard of living due to the availability of goods & services across the globe
- Increased flow of skill and non skilled jobs and workers which enables better employment conditions across the countries. Eg: Large numbers of Indian citizens work in the Middle East country which helps both the countries.
Disadvantages of globalization:
- Companies face much greater competition. This can put smaller companies, at a disadvantage as they do not have resources to compete at global scale.
- It can increase spread of communicable diseases.
- Economic depression in one country can trigger adverse reaction across the globe.
- Widening of Gap between rich and poor countries
- Exploitation of workers: Paying the workers in less economic developed countries a fraction of what would be paid to the parent citizen workers
Impact of Globalization in India:
- Indian consumers are availing cheaper products due to globalization. There was one stage where only Ambassador Cars were available at high prices but now plenty of automobile companies are existing supply at low prices.
- Indian consumers have more choices to choose from. In consumer durable industries at one point , only Videocon, Onida & BPL ruled the market, but now these companies are no more capturing a big market share. Consumer has plenty to choose from variety of companies such as Samsung, Sony, HP etc.
- Indian consumers have an access to better quality of products due to global standardization. MNC’s such as Mc Donald’s, Coke etc maintain the same standard in India which is maintained throughout the world.
- Indian consumers now have a better standard of living due to the easy access of products across the globe. Online marketing, E Business & Mobile banking has helped Indian Consumers to establish a global living standard.
- Due to globalization the concept of outsourcing is made possible. The employment in India has improved to a great extent due to the emergence of call centers, BPO’s & KPO’s.
- Any Indian company can dream now to become a Indian MNC due to globalization. In finger tips the world market is available to them. Companies get access to much wider markets which give a scope of further development of organisations
- Increased flow of skill and non skilled jobs and workers which enables better employment conditions across the countries. Eg: Large numbers of Indian citizens work in the Middle East country which helps both the countries.
Global Mind Set:
The process of globalization forces companies and individuals to develop global mindset.
A Mindset is the way we, whether an individual or an organisation observes, accepts and makes sense of the world around us.
A global mindset will comprise of the following aspects:
Intellectual global mindset:
- Understanding of how to build and manage global alliances, partnerships and value networks
- Ability to manage the tension between corporate requirements and local challenge
- Ability to handle complex cross-culture issue
- Understanding of global business and industry
- Understanding cultural similarities
- Understanding other cultures and histories
Psychological global mindset:
- Respect for cultural differences
- Willingness to adapt, learn and cope with other cultures
- Willingness to accept good ideas no matter where they come from
- Acknowledgement of validity of different views
- Openness to cultural diversity
- Ability to suspend judgment about those from other cultures
- Positive attitude toward those from other cultures and regions
- Ability to adjust behaviour in a different cultural and regions
- Willingness to work across time and distance
- Desire to learn about other cultures and other parts of the world
Social global mindset:
- Ability to generate positive energy in people from a different part of the world
- Ability to excite people from a different part of the world
- Abilty to connect with people from other parts of the world
Human Resource Management:
HRM is a management function that helps a manager to plan the required manpower, recruit, select, train, motivate, engage and develop employees for the Organisation.
In other words, it is an organizational function that is related to the employee concerns such as recruitment, employee motivation & development, training, wellness, compensation, benefits and administration
Importance of Human Resource Management:
- It helps an Organisation to supply the required manpower to accomplish the organizational goals.
- It trains the employees to gain specific skills and knowledge required to work.
- It facilitates and provides opportunities for employee development.
- It engages the employees to their work & to the organization.
- It provides an employee their wages, benefits, recognition, motivation, social security & status.
Functions of Human Resource Management:
|Manpower Planning||Performance Management|
|Selection||Compensation and benefits|
|Training & Development||Employee Exit|
Impact of Globalization on HRM
Globalization symbolizes free flow of technology and human resources across national boundaries presenting an ever-changing and competitive business environment. Globalization is a process that is drawing people together from all nations of the world into a single community linked by the vast network of communication technologies. This aspect of globalization has also affected the HRM in the business world of today. HR managers today not need to rely in a small limited market to find the right employees needed to meet the global challenge, but today they can recruit the employees from around the world. The future success of any organizations relies on the ability to manage a diverse body of talent that can bring innovative ideas, perspectives and views to their work. Thus, a HR manager needs to be mindful and may employ a ‘Think Global, Act Local’ approach in most circumstances. Many local HR managers have to undergo cultural-based Human Resource Management training to further their abilities to motivate a group of professional that are highly qualified but culturally diverse. . Furthermore, the HR professional must assure the local professionals that these foreign talents are not a threat to their career advancement. In many ways, the effectiveness of workplace diversity management is dependent on the skilful balancing act of the HR manager.
Global HRM refers to Human Resource Management practices that deal with managing a diversity of workforce from all around the world.
The impact of globalization on HRM is as follows:
- Managing Cultural Diversity: Managing different employees from different cultures in the same organisation is a complex activity. Employees from each country think differently, perceptions are different towards work culture, the languages change, vocabulary differs and even non verbal communications are quite different from each region. This makes the task of the human resource department challenging due to globalization.
- Managing Expatriates: Preparing the home country employees to work in a different country is a herculean task. The beliefs, value system, culture, attitude are diverse in nature. Recruiting, retaining and motivating expatriates have a major impact on the business. Understanding expatriate’s need is a prime concern for the human resource team.
- Difference in the Employment Laws: The employment laws or the labour laws differ from one country to another. The understanding of not only the monetary benefits becomes essential but also the non monetary benefits such as leaves, flexi timings are important to be included in the human resource policy.
- Managing Outsourcing of employees: Outsourced employees to manage business are the big impact of globalization. Managing the BPO, KPO employees working with a different culture, different language, working in completely opposite shifts is a new shift in the area of human resources. Managing the expectation of these employees is a challenge for today’s HR and this challenge is a result of globalization.
- Managing virtual employees: Majority of the information technology based organisations have employees working “on-site” at a client’s location which is completely new to them. The virtual employees have to be managed, retained and motivated in a different way unlike the “off-shore” employees. This practice of managing the virtual employees is a result of organisations going global.
- Corporate Social Responsibility: Corporate houses actively participating in the practice of doing for the betterment of the society has emerged from the western countries. It is one of the ways make the presence felt in the host countries. Employees are encouraged to participate in such activities which help to reduce stress working with MNC’s.
- Coping with flexible working hours: The practice of flexible working hours has emerged as one of the retention initiative of workforce specially women employees who can maintain the work life balance. This practice of flexible working hours is result of working beyond normal time zones. Organisations which have a global presence need the attention of employees at various time zones which is not possible for all employees doing a continuous shift. Hence this practice emerged from globalization and has a positive impact on the HRM practice.
- Evolution of more part-time and temporary work (especially among women, the elderly and students): The concept of part time employment, contract jobs have emerged from the practice of MNC’s since hundred percent of workforce on permanent payroll is quite a expensive matter to these organisations. Majority of large MNC’s in the information technology sector has their employees under contract employment.
- Coping up with emerging technologies & quality measures: Every employee in today’s leading organisation is being trained with the latest technologies especially with the ERP concept like SAP or Peoplesoft. This step has been taken by MNC’s to equip the employees with latest technology enabling the employees to cope up with the changing technology. Certifications like Six Sigma are availed to employees to manage the business on an international platform.
- Changing perspective from subordinates to business partners: The shift has been observed in today’s MNC that culture of subordinates is getting extinct. Employees have been treated as business partners’ i.e every employee is responsible towards the growth of the organisation and considered as a partner in the company. This impact is the result of globalization.
International Human Resource Management: Performing the HRM functions across the globe for the organisation.
International human resource management is all about the world wide management of human resources – Process of sourcing, allocating, and effectively utilising their skill, knowledge, ideas, plan and perspective in responding to TQM.
The process of procuring, allocating and effectively utilizing human resources in an international business is called International Human Resource Management or IHRM. International Human Resource Management is the process of sourcing, allocating and effectively utilizing human resources in a multinational organization.
Purpose of IHRM: To enable the firm /, the multinational corporations (MNCs), to be a successful globally
Dimensions of IHRM:
According to P.V. Morgan: IHRM is the interplay among 3 dimensions:
- HR Activities
- Types of employees
- Types of Countries
1) Broad activities of IHRM – procurement, allocation and utilization of human resources cover all the six activities of domestics HRM i.e, HR planning, Employees Hiring, Training and Development, Remuneration, Performance Management and Industrial Relations.
2) The three national or country categories involved in IHRM activities are:
- The host country where subsidiary may be located
- The home country where the company has its head quarters and
- Other countries that may be sources of labour or finance.
Types of Organisations:
- Multinational Corporation ( MNC) : MNC is an organisation which operates in more than one country
- Transnational Corporation (TNC): TNC is an organisation, that produces, markets, invests and operates across the world
- Home Country/Parent Country: HC/PC is the one where the headquarters of an MNC or TNC is located.
- Host Country: Host country is the one where the subsidiary/branch of an MNC/TNC is located
3) The three types of employees of an international business are – Parent Country Nationals (PCNs) , Host Country Nationals (HCNs) and Third Country Nationals (TCNs). For example, IBM which employs Australian citizens in its Australian operations, after sends US citizens to Asia Pacific countries on assignment, and may send some of its Singaporean employees to its Japanese operations.
Types of Employees
- Expatriates/ Guest Employees: (All Types of foreigners.) Expatriate is an employee working and living in a foreign country where he/she is a non citizen.
- Inpatriates: Inpatriates are those Host Country Nationals transferred to head quarters of MNC
- Home Country Nationals/ Parent Country Nationals: ( PCN) are employees of an MNC/TNC who are citizens of the home country/parent country of the MNC/TNC
- Host Country Nationals (HCN): Employees of an MNC/TNC’s subsidiary/ branch who are the citizens of the country where the subsidiary/branch of the MNC/TNC is located.
- Third Country Nationals (TCN) : These are employees of an MNC/TNC or their subsidiary/ Branch and are the citizens of those countries other than the MNC/TNC’s home country and or host country.
Difference Between domestic and IHRM:
Broadly there are two major factors therefore which differentiate domestic HRM from IHRM.
- The complexities of operating in different countries / cultures
- Employing different nationals and different categories of workers across boarder.
The practice of HRM in the international context is different from its domestic counterpart in a number of ways. These include:
- Being responsible for a greater number of functions and activities such as selection, training and management of international assignees.
- Having to expand one’s area of expertise to include a much broader knowledge of foreign country employment laws and global organization designs.
- Having to get much more closely involved with employees lives as the firm moves employees to foreign assignments. For example, collecting information and furnishing to visa authorities about aids or material status of employees.
- Being involved with greatly expanded and constantly changing mix of employees (from the host countries and foreign locals), adding considerable diversity and complexity to the HR tasks.
- Coping up with more external influences; for example, having to consider the impact of foreign cultures and laws.
- Having to face greater exposure to problems and liabilities (for example, making mistakes in expatriate assignments can cost as much as US$4 million per assignee). The accumulated direct and indirect costs can be huge.
- Additional responsibilities like translation of language, both at headquarters and at the subsidiary level, organizing schooling and housing for expatriates and providing administrative services.
- Management of differential compensation due to variety of allowances and adjustments.
- More emphasis on activities like international relocation and orientation, both pre departure and post departure cultural training.
- Knowledge of international taxation, rate of inflation and cost of living, including currency fluctuation.
- Diversity management, like managing people from different cultural and political backgrounds and gender differences.
Additional functions performed by International HR Managers
Staffing & Recruitment: Understanding cultural differences in recruitment process, in the selection of candidates and in what motivates employees is crucial in the staffing and recruitment processes for any international operations.
Recruitment for international operations requires a thorough understanding of the business processes involved in that part of the globe and the skills required to operate them. These must then be matched to available local talents and skills; your recruitment policies have to be amended to fit these criteria. Each area may require a separate evaluation as educational levels may vary. Requirements for physical standards may also change, and this factor may have to be considered while recruitment is being done.
Salaries and Compensation Packages
While fixing up offer packages, care has to be taken to see that local standards are maintained while at the same time overall organizational requirements are also met. Local laws regarding minimum wages, bonuses and other benefits have also to be structured in to the packages. Insurance, pension and such benefits should be reviewed as they relate to the present policies of the company.
Training and Development of Staff
People learn differently around the world. Global companies need to deliver the same training program and consistent message on a worldwide basis which becomes a challenge for the international HR Manager. Local facilities for training and development of staff need to be kept in view. If these are not adequate, sending staff to other countries may need to be looked at, and the additional cost and benefits of such training need to be carefully studied. Possibilities of developing in-house training should be examined to reduce costs.
Administration of Personnel
Working conditions may vary in each area of international operations. Administration of HR and related matters remain intrinsic in the decision-making process. Working hours must follow minimum local laws and the start or end times of work may have to match with international operations in certain important functions.
When considering global human resource management, each area of international operations may need to comply with certain religious and national festivals.
Human resource professionals who support international business operations typically must to ensure that diverse teams work well together. By conducting team-building workshops, promoting acceptance of cultural diversity and motivating employees to achieve strategic goals, they help their company build strong teams. By recognizing that in some countries individual recognition plays a larger role than others, human resource professionals can create awareness about how teams can function effectively across borders to maintain company profitability.
Maintaining Gender Diversity
Maintaining and managing the gender diversity is an additional responsibility for an International HR Manager. There are countries where the count of women are negligible, whereas in some countries women are equally qualified & work with men. An international HR should posses the cultural knowledge and should be aware of the sources to maintain the diversity in the work place.
Re-entry and Career Management
Often the HR Policies of company does not contain specific policies for the eventual return of their employees. While it may seem a trivial matter to some, there are many issues for the returning employee and his family. A well thought out plan for repatriation should be at least as well thought out as the departure plan for the expatriate. There should be a physical relocation plan, a transition plan for the employee and an allowance for readjustment. Just as their may have been culture shock in the transition to the expatriate assignment there may likely exist reverse cultural shock on the repatriate and his family. This reverse culture shock should not be dismissed as unimportant.
Working with Diversified Managers
As companies become more global, human resource professionals act as business partners to interview and orient new employees to the workplace. A complex business operation typically requires specialized personnel, so human resource professionals must work cooperatively with managers on the production lines from diversified culture
Global Employee Data Management
If any company employs any international employees, it may have obligations under foreign laws to have specific safeguards in place. Failure to observe a jurisdiction’s data protection laws can result in staff penalties and unwelcome press coverage. In such case the role of an international HR become more crucial
Although the European Union is leading the way with a proposed comprehensive new data protection law, other countries from China to the United Kingdom, South Africa, Qatar, Dubai, and several Latin American countries are developing, or have already enacted, their own data protection laws, with many based on the European model.
Customization of the policies to fit local requirements would have to fit the overall strategy of the organization. Policies may have to be framed for recruitment of expatriates and international employees who would be able to freely move about in the various areas of operation without causing any problems in relocating. Policies for temporary posting needed to start new operations or to facilitate training may also need to be worked out.
Major Issues in International HRM
According to Hendry (1994), there are three main Issues in IHRM:
- The management and development of expatriates- selection, training, compensation and repatriation of expatriate failures.
- The internationalization of management through out the organization (host country, parent country and other third countries)
- The need to internationalize the whole organization by creating a new corporate culture reflecting the need for greater international experiences across the whole organization, due to the increasing frequency of cross cultural interactions of doing business at home as well as abroad mainly Cultural communication & gauge and Language and communication.
Impact of Globalization on Employment
- Increase in employment growth: Due to globalization, employment opportunities have increased in the developing economies like India. Emergence of BPO’s and KPO’s has given a boost to the employment wherein lacks of young youths have been employed in this sector. This was made possible due to organisations going global.
- Diversified Employees: As the number of organisations is going global, the rates of diversified employees are also increasing. Today’s MNC have citizens from all around the world which is the result of globalization. Managing cultural diversity is one the challenges in today’s employment scenario.
- Higher Compensation: As a result of the competition, every MNC is trying to provide some additional benefit apart from the basic compensation. Prospective employees have greater choice to select an organisation which gives a better compensation with innovative benefits.
- Flexible Benefits: Competition among the MNC’s has arrived due to globalization. Every organisation is ready to provide to flexible and customized benefit to the employees. Now employee has the luxury to select the benefit which appeals to them.
- Economic Development: Overall the economy is developed due to the increase of employment opportunities from the IT and ITES companies. Due to globalization, many companies are switching to the developing economies like India where the workforce is available at a lesser cost which enables overall development of the economy increasing the disposable income of the employees.
- Higher Choices for Employees: Due to globalization, the employees have a higher choice to select their employer of choice which gives the maximum benefit along with the compensation.
- Increase in Quality of Employees: The quality of the employees have improved due the number of prospective employees applying for the employment opportunities. This has been made possible due globalization where the employment opportunities have increased cutting their geographical boundaries.
- Higher Disposable Income: Due to the emergence of global MNC’s the competition have increased in the market and as a result of this competition every MNC is proving lucrative compensation packages to attract, retain and motivate employees with various facilities to remain engaged with the organisation.
Human Resource Development
HRD: Human Resource Development (HRD) is the integrated use of training, organizational development, and career development efforts to improve individual, group, and organizational effectiveness.
HRD is the part of human resource management that specifically deals with training and development of the employees. Human resource development includes training an individual after he/she is first hired, providing opportunities to learn new skills, distributing resources that are beneficial for the employee’s tasks, and any other developmental activities.
Ways for Human Resource Development:
- Job Rotation
- On the job training
- Course entitlements/attending conferences
- Membership in professional association
Impact of Globalization on HRD:
- Expat Training Issues:
- Cultural issues
- Adapting technology
- Leadership Issues
- Performance Metrics Challenge
- Skills Level Difference
- Difference in service levels
- Difference in career development
- Difference in employee engagement levels
- Increasing national R & D expenditure
Impact of Globalization on Wages & Benefits
It is the remuneration received by an employee in return for his/her contribution to the organisation.
Where remuneration = Monetary & Non Monetary Benefits
In other words it is the sum total of financial returns plus tangible services & benefits which an employee receives as a part of an employment contract.
Types of Compensation
- A) Direct (Directly related to the salary)
- B) Indirect (Indirectly related to the salary)
- Net Salary( Actual Salary take home)
- HRA(Org provide either accommodation or pay HRA as part of social security)
- Conveyance ( Cab facilities. Petrol allowance, car allowance with driver)
- Medical Bill(Treatment bills)
- Bonus( Paid during festive seasons)
- Special Allowance(Mobile allowance, meals, loan on reduced interest, club membership)
- Leaves( Casual leaves, sick leaves, maternity leaves)
- Overtime policy
- Travel Allowance
- Retirement Benefits
- Flexi Timings
- Holiday homes(guest house facilities for employees at different locations)
- To attract, retain & motivate employees
- To establish different levels of salary based on the roles and responsibilities
- To base the salary adjustments on individual contribution & performance
- To pay salaries that are competitive within the industry
TOTAL REWARDS MANAGEMENT
Compensation alone can’t attract, retain & motivate the employees, hence total rewards management has to be implemented for complete performance.
- Compensation – Wages & Bonus
- Benefits – Vacation & insurance
- Security – HRA, Consistent Rewards
- Social Interaction – Friendly Workplace
- Work Variety – Opportunity to experience varied roles
- Work Load – Right Amount of work
- Career Advancement/Development
- Feedback Mechanism
Impact of Globalization on Wages & Benefits
- Recognizes differences in pay practices, taxation, benefits, market conditions, and regulations across the globe
- Competitive Base pay
- Work / Life balance
- Pay raises linked to individual performances
- Reputation of Organization as a good employer
- Competitive retirement benefit
- Variety of work assignment
- High Level of autonomy
Impact of Globalization on Trade Unions:
Trade Unions: It is an organization/committee/patry whose membership consists of workers and union leaders, united to protect and promote their common interests.
The principal purposes of a trade union are as follows:
(1) Negotiate wages and working condition terms
(2) Regulate relations between workers (its members) and the employer
(3) Take collective action to enforce the terms of collective bargaining
(4) Raise new demands on behalf of its members
(5) Help settle their grievances.
Centre of Indian Trade Unions (Hindi: भारतीय ट्रेड यूनियन केन्द्र), CITU is a National level Trade Union in India politically attached to the Communist Party of India (Marxist). The Centre of Indian Trade Unions is today one of biggest assembly of workers and classes of India. It has strong unchallengeable presence in the Indian state of Tripura besides a good presence in West Bengal and Kerala. They have an average presence in Tamil Nadu and Andhra Pradesh.
Functions/ Role of a Trade Union
- Political role, using collective power to influence decisions on behalf of members and the wider society;
- Market role, by intervention wage bargaining and thus impacting on the economy;
- Regulatory role by setting standards in relation to jobs and terms and conditions;
- Democratizing role, in creating industrial democracy at the workplace;
- Service role, in promoting the intervention of members;
- Enhancement role in helping to develop the human potential of members; and
- Welfare role in providing assistance to particular groups.
Impact of globalization on Trade Union:
- Global economic trends have put tremendous pressure on the working class. Global institutions like World Bank, International Monetary Fund, WTO, are putting tremendous pressure on other nations to rationalize labour laws and weaken trade union rights. This emerging global economic environment is very favorable to the growth of Multi National Companies.
- To increase the competitiveness of their products in the global market, many countries have adopted the so-called neo-liberal policy, with one of its key parts being legal restrictions on workers’ rights for the sake of higher economic efficiency. As a consequence, trade unions in many countries have lost their rights that they had won through many years of struggle.
- Companies are increasingly adopting methods to lower wages and social security costs by adopting measures like privatization, closures, lay-off, retrenchment, Voluntary Retirement Scheme and sub-contracting.
- Many MNC’s have adopted labour intensifying incentive schemes, performance linked wage systems and compulsory overtime. In all these management strategies the key element is the flexibility in labour relationship.
- Practice of informal employment and cheap forms of labour, such as part-time, casual and domestic workers; have become prevalent over the past few years. Those informal workers have not enjoyed adequate protection for their employment, wages, social security and occupational health and safety. Changes in employment patterns have in turn rendered it very difficult for trade unions to organize workers.
- Some developed countries have shifted their labour-intensive enterprises to other countries. Trade unions in those developed countries have lost some of their traditional industrial bases. In the meantime, the fast application of new and high technologies in traditional industries such as steel, manufacturing and construction has caused a drop in labour demand on a yearly basis. Furthermore, the traditional ways of trade union work have been challenged in IT and other hi-tech industries. Against such backdrop, union density has declined in many countries.
- Indian law ensures strong protection for the rights of workers, but gives limited access to the workplace to unions. This is one of the reasons that the trade union movement has generally relied on its political connections and affiliations. India’s trade union federations have historically aligned with political parties.
- India has not approved ILO conventions on Freedom of Association and Protection of the Right to Organize Convention, 1948 and Right to Organize and Collective Bargaining Convention, 1949.
- As India became more open to corporate globalization privatization, de-regulation, down-sizing, and outsourcing have generated massive unemployment and hunger, with the vast percentage of Indian workers employed in agriculture and the informal sector.
- The impact has been that due to the open liberalized economy and the pressure of the loans being given by the international institutions to India, there have been policy changes in the govt. These changes have been not only at the level of implementation but also in the laws. The most noticeable changes have been the right to employment and right to strike by workers in India. The Supreme Court rulings in the last 3-4 years on labor laws reflect the same. The changes have been related to the new hire and fire policy been implemented and also the right to strike made illegal. This is also the cause of a lot of trade unions to lose their negotiating power with management as the highest court in the land has very much undermined the constitutional guarantee of the workers.
Impact of Globalization on Collective Bargaining
Collective bargaining is a process of negotiations between employers and a group of employees aimed at reaching agreements that regulate working conditions. The interests of the employees are commonly presented by representatives of a trade union to which the employees belong. The collective agreements reached by these negotiations usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms, and rights to participate in workplace or company affairs.
A collective agreement or collective bargaining agreement (CBA) is a special type of commercial agreement, usually as one negotiated “collectively” between management (on behalf of the company) and trades unions (on behalf of employees). The collective agreement regulates the terms and conditions of employees in their workplace, their duties and the duties of the employer. It is usually the result of a process of collective bargaining between an employer (or a number of employers) and a trade union representing workers.
Impact of Globalization on Participative Management
Participative Management: Participatory management is the practice of empowering employees to participate in organizational decision making. Employees at all levels are encouraged to contribute ideas towards identifying and setting organizational-goals, problem solving, and other decisions that may directly affect them. Also called consultative management
Importance of Participative Management:
- Participative management holds employees responsible, accountable for their work.
- It allows them to determine the outcome of work related activities.
- Participative management affords employees a voice. Employees take their jobs seriously and become loyal to the organisation.
- It delegates control to employees but the organisational goal must be achieved to.
- It fosters a team environment. It is management’s job to explain what’s expected and work with the employees to achieve goals.
Increase in Productivity: An increased say in decision making means that there is a strong feeling of association now. The employee now assumes responsibility and takes charges. There is lesser new or delegation or supervision from the manager. Working hours may get stretched on their own without any compulsion or force from the management. All this leads to increased productivity.
Job Satisfaction: In lots or organizations that employ participative management, most of the employees are satisfied with their jobs and the level of satisfaction id very high. This is specially when people see their suggestions and recommendations being implemented or put to practice. Psychologically, this tells the individual employee that, ‘he too has a say in decision making and that he too is an integral component of the organization and not a mere worker’.
Motivation: Increased productivity and job satisfaction cannot exist unless there is a high level of motivation in the employee. The vice versa also holds true! Decentralized decision making means that everyone has a say and everyone is important.
Improved Quality: Since the inputs or feedback comes from people who are part of the processes at the lowest or execution level. This means that even the minutest details are taken care of and reported. No flaw or loophole goes unreported. Quality control is thus begins and is ensured at the lowest level.
Reduced Costs: There is a lesser need of supervision and more emphasis is laid on widening of skills, self management. This and quality control means that the costs are controlled automatically.
Disadvantages of Participative Management
There is a flip side to everything; participative management stands no exception to it. Whereas this style of leadership or decision making leads to better participation of all the employees, there are undoubtedly some disadvantages too.
Decision making slows down: Participative management stands for increased participation and when there are many people involved in decision making, the process definitely slows down. Inputs and feedback starts pouring from each side. It takes time to verify the accuracy of measurements which means that decision making will be slowed down.
Security Issue: The security issue in participative management also arises from the fact that since early stages too many people are known to lots of facts and information. This information may transform into critical information in the later stages. There is thus a greater apprehension of information being leaked out.
Participative Management may fail because of the following reasons:
Resistance to Change: Participative Management calls for a change in the entire organizational culture. Older employees specially resist change and do not welcome it. They take it as a device to curtail their powers. Training is also not welcome.
Workers tendency to deviate: Managers must be aware of the tendency of the workers to try spending more time formulating strategies than focus on job in hand. This needs to taken care of. Again top level management may not support this style if they find existent inefficiencies.
One stop Solution: Participative management can not always be a one stop solution for every problem. Often the manager needs to delegate or take a decision on his own without consulting or seeking others advice. For example, cases where disciplinary action is needed do not qualify for participative management.
Size of the Organization: This style of management can be more difficult to implement in organizations that are big in size. Big size means that there are large numbers of management layers. This often makes registering opinions and suggestions difficult. More difficult can be the implementation of the same.
Abuse of Authority: Managers sometimes look upon their own jobs as a license instead as a responsibility. They are unwilling to give away some authority to their subordinate which slows down and chokes the process of decision making. Often such managers complain of being overburdened with responsibilities. This fails the idea of participative management.
Misunderstanding Participation: This is yet another reason for failure of participative management. Managers sometimes fail to understand that participative management is not the same as delegating or distributing responsibility. They fail to realize that participative style also involves considering the suggestions and recommendations of employees with respect and dignity.
Impact of Globalization on Participative Management:
- Evolution of Participative Management: The concept of participative management is a result of globalization.
- Global Challenges can be faced: For better production, better quality, global standards
- Serving global customers:
- Better Problem Solving:
- Enhanced team culture:
- Healthy IR conditions
Impact of Globalization on Quality Circles
A quality circle is a participatory management technique that enlists the help of employees in solving problems related to their own jobs.
A quality circle is a volunteer group composed of workers usually under the leadership of their supervisor who are trained to identify, analyze and solve work-related problems and present their solutions to management in order to improve the performance of the organization, and motivate and enrich the work of employees.
Quality circles are typically more formal groups. They meet regularly on company time and are trained by competent persons (usually designated as facilitators) who may be personnel and industrial relations specialists trained in human factors and the basic skills of problem identification, information gathering and analysis, basic statistics, and solution generation.
The Impact of Globalization on Quality circle:
- Improvement in human relations and workplaces morale: Quality circle is a result of diversified employees working towards one common goal. Due to globalization, a diversified group of employees work together in the same organisation which has led to improvement of human relation or relationship between employees from all over the world and this has led to an increase in morale in the workplace of employees.
- Promotion of work culture: The work culture has become healthy due to the diversity of employees in an organisation. Globalization has promoted work culture i.e every employee is anxious to work due to availability of various opportunities available to them. Example salary raise, change of working area and so on.
- Enhancement of job interest: Due to globalization quality circles have enhanced job interest in the employees by allocating them to job they do best and offering an exciting working environment.
- Effective team work: Team work has been highly achieved by quality circle due to globalization and availability of employees from around the world. This quality circle creates a spirit of belonging in the employees hence motivate and encourage them to work together.
- Reducing defects and improving quality: Globalization has demanded to produce better quality products to sustain the global competition. Quality circle has placed a significant role in identifying defects and improving quality of product according to global or international standard.
- Improving of productivity: Quality circle promote the productivity of organization by ensuring that production goes smoothly and problems hindering production are solved as soon as possible. Due to globalization, best ideas from different employees belonging to different countries come to one place thus improving the overall productivity.
- Enhancing problem solving capacity: Quality circle enhances problem solving due to the fact that they consider all the possible problems and work hand in hand to solve them before any harm is reached. Employees from different parts of the world share their best practices resulting the best probable solution in a quality circle.
- Improving communication and interaction: Quality circle improved communication skill and interaction skills by mixing up all the people from many part of the world and train them on soft communication skills.
Managing Diversified Culture
Culture is everything we see around us. It is how we act, what we think, and what we believe. It is the words we use, the food we eat, and the clothes we wear. However, beyond these things mentioned underlies invisible values and beliefs that make up behaviors that are unique to each society.
Cultural diversity is defined as the ethnic, gender, racial, and socioeconomic variety in situations, institutions, and groups.
Why is cultural diversity such a challenge?
The central problem behind the cultural diversity is the false consensus effects i.e the tendency to believe that others see the world more like us than they actually do. People from different cultures see the world even more differently from us than we are used to, yet the false consensus effects leads us to behave as though people of other cultures see things just like we do. This creates confusion, misinterpretations, poor decisions, in-effectiveness and is bad for business. We may be able to see the obvious outward signs that make up ones culture, but oftentimes we fail to understand the invisible culture i.e invisible values and beliefs that make up behaviors that are unique to each society. The challenge arises because people in organizations differ in a great many ways – race, gender, ethnic group, age, personality, cognitive style, tenure, organizational function, and more. There is also the fact that diversity not only involves how people think of others and how this affects their interaction but also how they imagine of themselves.
Some of the disadvantages or challenges in a diversified culture are:
Some of the disadvantages of international teams are:
- Language: One of the first disadvantages of working in an international team can be the impact of language. Even though we use might use the same words does not mean that we use the same language. This is especially evident when we compare American English and British English. Two people might be using the same words, but understand one another on a completely different level. Multi-International teams have individuals who will not be able to converse in their native tongue. Undoubtedly, this will lead to some form of misunderstanding when working together for at least one member of the group. “When people speak with their team in a language other than their native one, it often affects their ability to interact with the group. It potentially affects spontaneity, clarity of expression (vocabulary and pronunciation), and willingness to express ideas. Specific areas of miscommunication can be found in the form of vocabulary, language style, non verbal communication, and the unwillingness to express ideas.
- Vocabulary- The vocabulary that we and others use can sometimes be confusing to others who do not speak the same native language, let alone to those who do. Many miscommunications can arise if we are not aware of the speech and vocabulary we use and how it is interpreted by the receiving party.
- Language Style– Varying nationalities communicate differently. When working in teams some individuals may be very direct and blunt, while others may be indirect and vague in their communication. Each person may interpret these language styles differently. It is important to recognize the differing language styles and the common misunderstandings that can come from it. Accents, pronunciation, slang and the use of idioms can also cause fundamental misunderstandings.
- Non Verbal Communication- A majority of communication is done through non verbal communication. Non verbal communication has an enormous impact on intercultural communication because of the way in which it can be misinterpreted from one culture to the next. Non verbal communication can give off mixed signals if you are not aware of the communication style of the person with whom you are working.
- Unwillingness to express ideas- The inferiority complex where team members feel they cannot express themselves in the language that is being used, so they do not express their ideas.
- Attitudes toward time-The difficulty in dealing with international teams is that each culture has a different attitude toward time. This can cause problems when prioritizing tasks and completing tasks within certain deadlines.
- Different Value Systems: “Peoples’ values are expressed through what they say and what they do. Therefore people working together from different cultural backgrounds may find that they approach and execute tasks differently because of differences in their cultural values. Understanding differences in value systems helps us to understand how and why individuals may behave differently to ourselves. This can help us work more effectively together and make the most of the benefits that those differences offer.”
- Preconceptions & Stereotypes: Stereotypes are the tendency we have to simplify the world by putting people into a category, and then fitting the individual into the stereotype of that category. If you interact with a team member from a particular country, you may have the tendency to put another a future team member in the same category as the first team member with whom you interacted.
Today’s corporations recognize the importance of cultural diversity. Many companies value diversity so strongly that they devote large sections of their websites towards diversity. Companies share their personnel statistics to illustrate their relatively progressive minority staffing for jobs in lower management, upper management, and their board of directors. Such companies want to show that they are meritocracies where minorities will be treated equally, which leads to greater diversity. Notably culturally diverse companies include Aetna, AT@T, Booz Allen Hamilton, General Mills, General Motors, Hewlett-Packard, IBM, Lucent Technologies, Nissan, Price Waterhouse Coppers, Toyota, and Waster Management. These companies have received many awards that recognize their pursuit of a more diverse workplace.
Cultural Intelligence (CQ): “Cultural Intelligence is the outsider’s ability to interpret someone’s unfamiliar and ambiguous gestures the way that person’s compatriots would”
Most managers fit within one of six established profiles.
- The provincial: Effective when working with people of similar background, but lacks the ability to work with people from other cultures
- The analyst: Tries to methodically analyzes other cultures and tries to apply learned strategies
- The natural: Relies entirely on his own natural intuition and avoids learning more or improving based on established techniques
- The ambassador: Likes differences and welcomes them, does not know much about the culture, but he is confident he can handle it.
- The mimic: Has a high degree of confidence in his actions. Easily communicates and fits in.
- The chameleon: Possesses high degree of CQ and could be even mistaken for native in certain situations.
Advantages of Diversified Teams:
- Diverse experiences within team members and the benefits of individual brainstorming
- By creating diverse teams, with people of different backgrounds and cultures, the group can help prevent groupthink.
- Diversity provides a greater variety of perspectives and ideas, which can lead to more creative solutions
Other advantages can be:
- Improves corporate culture
- Improves employee morale
- Leads to a higher retention of employees
- Leads to an easier recruitment of new employees
- Decreases complaints and litigation
- Increases creativity
- Decreases interpersonal conflict between employees
- Enables the organization to move into emerging markets
- Improves client relations
- Increases productivity
- Improves the bottom line
- Maximizes brand identity
- Reduces training costs
A diverse workforce enhances the following:
- Connection with the customer: The needs of diverse customers need to be understood
- Employee motivation: Employees maintain productivity when they are treated with dignity and respect.
- Employee innovation: A work environment open to diversity remains flexible and favorable to employee innovation.
- Employee recruitment and retention: A workplace that emphasizes interest and concern for its employees as people first is able to attract a higher-quality workforce.
- Continuous quality improvement: An environment where employee talents are valued will help to continually improve quality.
Ways to overcome difficulties when working in an international team:
- “Increase each individual team member’s knowledge of his or her own cultural values. This can be accomplished through suggested readings and online resources.”
- “Increase the team’s collective knowledge of the range of cultural differences in the group. It is important for people to review details of the cultures present in their team and think about where they might face challenges.”
- “Encourage people to assess their own personal cultural styles and how those styles may affect the group”
Other suggestions are:
- Do not assume things about a particular group or individual.
- Take time to get to know others.
- Learn about others’ cultures and customs in order to build and sustain relationships within your international team.
- Be sure to treat everyone in the group equally, regardless of their nationality.
- Learn about each other’s strengths and weaknesses.
- Do not put your own culture and way of doing things above others.
- “Try to see tasks from the other person’s point of view before you judge their contribution or performance.”
Provide mentors cross culturally. This will help senior leadership relate to and understand people of other cultures as well as provide them with an experienced guide. Simply assigning a mentor is not enough; the mentoring relationship must be active. Senior leaders are not always comfortable with mentoring and may lack mentoring skills and motivation. Provide training to both mentors and mentees and institute a regular process for monitoring their progress.
Circulate notices/news/videos of other international offices. Profile them in the employee newsletter. Let Iowa know what’s happening in Indonesia and vice versa. Focus on the people aspects more than performance.
Encourage leaders to prepare and present a cultural profile of their people. Some leaders use a PowerPoint presentation to introduce his diverse team and their local environment. This plays as a scene-setter before his main presentation.
Choose for talent, not quota. Leaders are grown, not born. If you don’t have enough of a talent pool from which to select emerging leaders, then grow the pool. This means actively recruiting more diversity candidates for their leadership potential. Also provide training and developmental opportunities, augmented by personal leadership coaching.
Open and effective communication is paramount in any team, international or not. Therefore, any miscommunications that can be mitigated beforehand will only accentuate the success of the team. “Establish conversational rules from the beginning. Acknowledge differences in accents and encourage team members to be mindful of them. Remind team members to refrain from using words with multiple meanings, idioms, or slang.”
Non verbal communication-
- “Even if you don’t speak the language, it’s a good idea to become versed in a culture’s nonverbal expressions, such as touching or bowing, personal gestures, and the display of emotions.”
- Keep in mind that “There exists no body movement, no facial expression, no gesture which could arouse the same reaction all over the world. A smile expresses friendliness in one society, in another embarrassment, in yet another it can include an enemy’s warning that attack is imminent if tension is not released.”
- “Limit hand gestures and maintain a moderate body posture.”
- “Silence can mean agreement, disagreement, or contemplation. Be careful not to make assumptions and express the overt message whenever possible.”
- “Do not interpret the absence of disagreement as agreement”
- “Nonverbal communication is powerful. Learn about the ways in which members express negative concepts. Silence is often one way to do this, but it also may show respect and allow contemplation of another person’s comment.
Stereotypes & Preconceptions: Do not give into preconceptions and stereotypes. Know that they exist and realize there are ways to prevent them. Encourage face-to-face interactions so team members can diminish any stereotypes that may exist. “Trust often develops when members establish credibility by demonstrating their abilities and competence. Give team members the opportunity early on to engage in tasks that demonstrate their skills or introduce team members to each other by highlighting their past experiences and current expertise with the matters at hand.”
Ways to Manage Diversify at Workforce:
Embrace diversity: Promoting a culture that values employees for unique skills, experiences and perspectives distinguishes an organization as all-inclusive, relevant and truly understanding of what customers want and need. In essence, it is a treasure trove of customer and business intelligence.
Internally, the more leaders understand and respect their employees’ differences, the easier it will be to make seemingly difficult conversations more comfortable.
Make it part of company policy and a core value that discrimination is not tolerated in your organization. Design a procedure for complaints regarding discrimination in the workplace, in addition to disciplinary action. Make sure that you are consistent in responding to complaints and executing discipline. Discrimination can occur in relation to age, gender, ethnicity, sexuality and disabilities or illness.
Create a visual of your team: Keep ethnicity and gender data on hand so that hiring managers can create a visual picture of the individuals on each team. When numbers and percentages fail, this mental image of who is on the team can help senior leadership see where diverse populations are underrepresented or underutilized and especially compare them to the customer population.
Invite staff into the inner circle: Create an environment of inclusion where all staff members feel valued, embrace the company’s mission, feel part of its vision and are fully tuned in with the organization’s business strategy. Help them understand just how important diversity is to serving customers best and that every individual is a big part of that. It’s easy to lose top performers because they feel detached, especially in large organizations.
Mentor and shadow: The best learning happens in the field, so develop a mentoring and shadowing program that pairs hiring managers with employees of different cultural or ethnic backgrounds or genders. This creates a trusted, educational environment where employees can feel safe about asking questions regarding different backgrounds, and also lets them see different cultural styles at work.
Celebrate the cultural differences: Assign a person to be in charge of finding ways to incorporate or celebrate the cultural differences within the company. Your employees can offer their suggestions and even be involved in the actual planning of these events and activities.
Boost the existing diversity of staff within your company through corporate publications. If you have a company magazine, website or annual report, highlight your company’s diversity whenever possible. When your diverse readers and web traffic recognize the diversity within your company, they may be more inclined to be a part of it.