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Example Answer On Multinational Companies And Complexity

Multinational firms (MNCs), in their effort of globalisation normally face complexity that triggered by multiculturalism and geographic dispersion. You can find three characteristics of intricacy in globalisation. 1) Multiplicity reflects the need of MNCs to be responsive to different viewpoints, open public opinion matter and government regulations. 2) Interdependence will means all operation and business activities are interrelated that can't be treated together. 3) Ambiguity means the lack of information clearness that will lead to difficulty in interpreting situations and people. Complexness in the international operating environment will then lead to various global challenges.

It is problematic for MNCs to accomplish organizational efficiency and lasting competitive gain locally as well as globally if it's operating lacking any efficient and systematic HRM methods that align with the business enterprise strategy. Paine & Co. which is building its international occurrence is facing some HR issues and difficulties that typically may happen in MNCs. In the case study, the following main HR issues have been identified.

A. Communication

Do not need a clear view of the corporate mission statement and vision set within the group.

Lack of communication route between the management and the employees.

Do not have get-together among personnel for idea exchange and employees feedback trainings.

B. Recruitment, selection and retention

Decentralised recruitment regulations.

Do not have good image branding and company reputation.

C. Performance management and reward system

Do not need well designed performance review and appraisal system.

D. Training and development

Do not provide staff intensive training for all new employees.

Do not have further on-job or off-job training for improvement of skills and knowledge.

Do not have interchanging of personnel between subsidiaries.

Communication being one of the most crucial components in human being life is also the main element of success for HR management. Effective communication is vital throughout a business to ensure transpire of most information and knowledge showing may be accomplished. Communication is also essential for the organizational objectives setting. Effective communication between the company and employees can result in a greater understanding in reaching organization's goal. Analysis by Lindholm, N. (2000) discovered that it's important to communicate the business goal and job objective obviously to the host-country employees in MNCs to increase their job satisfaction.

Jack Welch, the CEO of Basic Electric Co. (GE) acquired presented the "informal" culture over the company. The "Informal" by Jack Welch means violating the traditional chain of demand, creating communication across all tiers of the business and everyone can talk to the supervisor. During his tenure as GE's CEO, Jack Welch prepared a whole lot of corporate happenings that provide opportunities to all the employees to get-together and at exactly the same time the management can connect the company prices and eye-sight effectively to the employees. Besides that, Jack Welch also made sudden visits to plant life and offices abroad as well as scheduled luncheons with his managers to attain good leading, assistance, and effect the behavior of complex firm.

The weakness in communication within Paine & Co. can be seen in a few contexts. The communication problems started out using their company international extension with some of the subsidiaries running on decentralised basis. There are no common strategies and aims been arranged and communicate across all subsidiaries in the overall business operation. Addititionally there is no interchange of individuals between subsidiaries which can help promote knowledge writing and team spirit. Collecting workplace feedbacks from employees can aid in creating two-way communication which is important in an organization. Annual personnel opinion review is one of the methods that may be introduced to gather feedbacks from employees. In Paine & Co. , the occasion that consultants from France made immediate complaints to their MD bypassing their local manager had shown the lack in proper channel of communication within the organization. Besides that, Ferguson as the MD of Paine & Co. didn't focus on on knowledge posting and team work but only see personal results and performance as the main element factors of deciding the business success. Therefore, overall synergy can not be achieved for a larger sustainable competitive advantage.

Human assets are essential for service industry as their people are core area of the way to obtain services which have direct visibility from a customer point of view. Stringent recruitment and selection functions must be implemented to guarantee the right people are to be employed. Employer's reputation and corporate branding are other essential factors that will have an impact on the recruitment and selection process. Highly talented people are always looking for his or her "employer of preference" in seeking their job for better career advancement. Singapore Airlines (SIA) for example had been the "employer of preference" for many educated young people because of their reputation as something head in the air travel industry. Alternatively, SIA adopts a highly rigorous and strict selection process which the applicants are required to meet various criteria from prospect appearance, age ranges, academic certification as well as physical characteristics. The stringent selection process is to guarantee the right people bee preferred for the right job and at exactly the same time increase the service quality of the organization.

In this circumstance, Paine & Co. failed to perform the "best-practice" in the recruitment and selection strategies. The business has had problems in developing a brand with a good company image in Germany, both for clients and personnel. While facing the problem in recruiting good staffs, at the same time it also does not retain the skilled young employees. These have afflicted the efficiency and smoothness of the task and business procedure and at the same time will incur more expensive for recruitment goal. As recruitment and retention of staff is another challenging activity in IHRM. Employers need to choose the right people and put those to the right jobs, as well as managing their performance effectively and at the same time wthhold the quality employees from leaving the organizations. Only the right people will need the organization where they have to go. Hadhiphanis (2010) highlighted three conditions that need to be considered by management when recruiting employees: Value of experience and skills for the proposed position; behavioural and specialized competencies located in making hiring decision; and pre-screen individuals before interview. While for retention of personnel, Hadhiphanis (2010) again suggested that three strategies need to be carefully implemented in order to ensure the company provide less expensive to their employees as compare to their competitors.

Options of remuneration, fringe benefits and rewards system to employees.

Clear in communicating expectations and ability to gauge the performance against prospects.

Rotational assignments, job development and planning as well as financial support (job-related and non-job related) to employees.

The execution of good personnel recruitment and keeping strategies can not only build good employee's ability for today but also for the near future. Paine & Co. should identify the needs of their workers and should not expect employees atlanta divorce attorneys country having the same needs. More often than not, the employees' needs are shown in the social-economy and culture of the country. Besides that, employees' needs will not be the same constantly and review should be completed periodically to guarantee the HR techniques are being put in place correctly to accommodate the current conditions.

As for the performance management and prize system (PMRS) in Paine and Co. Although employees' reward and rewards are performance founded, the final decision still at the mercy of the older management discretions without going right through a proper appraisal and performance review system. Therefore their bonus system is not well-regarded. Performance management (PM) was thought as a HRM process concerning constant evaluation of individual and commercial improvement progress resistant to the predetermined objectives that are correlated to the business business strategy (Dowling et al. , 1999 cited by Lindholm, N. , 2000). The extrinsic and intrinsic motivations, understanding of job task and job satisfaction of the employees are mainly inspired by PM techniques of an company (Lindholm, N. , 2000). PM that is properly designed and executed will also assist in the objectives setting up, reducing job problems as well as making the most of employees' satisfaction and drive in achieving not only individual job goals but also align with the business's business strategy in attaining organizational goals.

Evidence from research acquired shown that cultural differences among countries will have an effect on the elements in implementing PM. PM methods will never be successful if MNCs put into practice and standardize their PM procedures at both home country office and the overseas subsidiaries without thought the cultural variations on the list of countries. Hofstede's ethnical dimensions theory have been applied by experts in their studies in romance between the cultural differences and the transferability of PM as well as job satisfaction in MNCs. Lindholm, N. (2000) advised that PM system should be altered to match to the culture of host-country. "Modular" type PM system that can suit to different cultures in different countries can be developed to increase the job satisfaction and performance of host-country employees. Besides that, the look and execution of a fair performance evaluation system by taking host-country employees' feedback into consideration is essential to make job satisfaction of employees in MNCs.

IHRM concern is one of the greatest challenges for any MNCs. Even top notch companies like Standard Electric Co. and African american & Decker Corp. will face some troubles in handling HRM issues when it first going global. Mendenhall, M. E et al, (2003) acquired identified the following "Big Five" global HR challenges for MNCs.

Enhancing global business strategy

Aligning HR issues with business strategy

Designing and leading change

Building global corporate cultures

Developing global leaders

The execution of good IHRM routines is becoming very important in the success of most organization irrespective their sizes and industry (Ulrich, 1997, cited by Nicolaou, N. and Costea, E. S). The "fit of this type of culture" HR system will be given more attention to be able to create a highly effective organization. In the current highly competitive globalization business environment, human resource become the key assets of a business and therefore the execution of IHRM strategy is the main element to the success of the business and its continuous competiveness in the global market.


Barlett and Ghoshal (2000, cited by Harzing, A. W and Ruysseveldt, J. V. , 2004) highlighted the three types of tactical objectives for MNCs are: getting together with the challenges of global efficiency; multinational versatility, and worldwide learning. Porter (1990, cited by Truong, et al, 2010) pointed out that the most significant source of competitive benefit for an economy is an experienced, flexible and well-educated labor force. While Heneman et al. (2000, cited by Truong, et al, 2010) mentioned that HR is important for all sorts of organizational sustainability. Many companies got realised the value of tactical HR tactics but just a few can use it strategically in conjunction with the business strategy to gain competitive benefit (Schuler R. S & MacMillan I. C, 1984).

The following stand shows the core components of HR practices that were determined and the proposed HRM strategies in order to help Paine & Co. in building their corporate business technique to gain long-term competitive gain.

HRM Central Components

Current Status


Recruitment and Selection

Recruitment and selection types of procedures not controlled or standardised

Do not have clear and strict conditions in selection

To use value-based hiring method

To perform proper job evaluation and description

Specification of minimum criteria in selection

Standardisation of recruitment and selection procedures (i. e. interview, psychometric ensure that you social test)

Compensation and Benefits

Remuneration system not standardised or corresponding to industry standard

To carry out industry remuneration review

To introduce profit sharing scheme

Performance Management and Praise System

Do not have proper appraisal review system

Rewards do not shown on the individual performance

No relationship between reward insurance policy and corporate and business business development strategy

To perform KPI as PMRS

To create link between goal-setting and performance achievement

Training and Development

Do not need proper training and development program

To have interval training for new staff

To provide constant training throughout employment

Retention of Talents

Lack of support from management to staff

Lack of communication between workplace and employees

Lack of motivation

Do not have succession plan

To create multiple programs for information sharing

To rewards the staff with progressive ways

To carry out employees' satisfaction survey

To develop a better job plan for employees

Schuler R. S and MacMillan I. C (1984) suggested two ways for HRM methods to help in gaining organizational competitive advantages: by supporting themselves and by helping others. They also clarified that good HRM practices should be first be targeted within the company before implement to the exterior get-togethers (i. e. customers, suppliers, distributors). Strategic HRM methods should be preferably integrated with the business enterprise strategy of a business in building long-tern competitive advantages.

Wirtz, J. , et al, 2007 thought that "The incorrect people are liability". Recruitment and selection is an important process in HRM that will make a decision whether the right person will be doing the right job at the right place. Value-based hiring method can be utilised by Paine & Co. in their recruitment and selection process. A details job evaluation and job functions information should be carried out before determining the selection requirements in their recruitment exercise. Apart from qualifications and experiences, criteria like physical features, social and psychological competency should also be considered when choosing their consultants who will be the front-line personnel that provide their clients. Therefore, apart from set up interviews, psychometric tests and interpersonal competency tests should also be contained in the screening process process to ensure high quality consultants are recruited. With stringent selection requirements, the doubt of hiring the right candidates with the expected features will be reduced. In long haul, the price for recruitment and selection process can be reduced because of the increased in efficiency of recruitment and selection process.

Besides the selection and recruitment process, Paine & Co. also facing problems in taking care of their reimbursement and benefits as well as PMRS. It's advocated that profit writing system to be created to the specialist advisers and mature consultants. This will likely encourage employees to participate the business companions and increase their dedication towards the business performance. While for PMRS, Paine & Co. should implement the main element Performance Signal (KPI) system to ensure reasonable evaluation of performance review and organised appraisal throughout the complete group. Implement of KPI system will not only guarantee good treatment to all or any personnel but also make the goals setting up and performance management process more effective.

Training is one of the main element the different parts of success for service industry like Paine & Co. For organizations that are seeking competitive benefits through HR, Khandekar, A. , and Shama, A. (2005) advised that they should design their HR systems so that human resources can be utilised proficiently and allowing knowledge been employed by employees to increase their organizational competitive. In this example, Paine & Co. is recommended to plan and provide an intensive training program to all its new employees before they carry out their duties. Interval training programs work HRM tools since it can help the newcomers to master their jobs which probably causing fewer anxieties among them. Besides that, company beliefs, goals and the targets from the company can also be evidently communicated across to the new personnel through intensive training. Subsequent off-job and on-job trainings should be organized and provided regularly throughout the employment period to boost knowledge and skills of employees. The training and development program is part of the tactical HR management that is vital for Paine & Co. to acquire sustainable service excellence and long-term competitive advantages in the industry.

Last but not least, the skills retention is another area that should be strategically integrated. Tobia, P. M (1999) brought up that bringing down turnover of staff will increase revenue of any company. Besides that, only employees who are determined and content with their working conditions are able to produce good services and products for better competitive benefit in the industry. Many young consultants in Paine & Co. left the business by getting started with the competition proofed that its employees aren't satisfied with their working conditions as compare to the rivals. Paine & Co. need to improve the provision of resources to the employees in undertaking their duties. Execution of some long-term retention programs such as ground breaking and good PMRS; people friendly policies and carry out employees' feedback study will definitely help in reducing staff turnover rate. Chance of career advancement is another determinant of retention success. Succession plan and career path planning is important to maintain talented employees and increase productivity.

By utilizing all the above suggested HRM strategies will not guarantee the best success of the business in attaining the long-term business competitive edge if there are no ongoing reviews and improvement strategies on its strategies. Besides a good HRM systems, products and brand differentiation; emphasis orientation; global thinking; a hypersensitive "radar system"; perpetual heart of innovations; sociable and environmental duties are a few of the other conditions for MSCs to become real "World Class Company" and achieve long-term business competitive advantage. All the previously discussed criteria will need to link people who have the tactical needs of the business as people is the most valuable asset of an organization. If the business enterprise needs of a business can be obviously identified and become included effectively with the HRM procedures, long-term ecological competitive advantage will not be far from attainable.


Planning and formulating the HRM practices with business strategy for competitive advantage will be meaningless if the management don't realize the basic needs of their workers. Therefore, marketing communications play an important role in the analysing and understanding the employees' behaviour so that the right HRM practices can be strategized. All employers really know what the company goals are, but not everyone is in a position to articulate their products or services with the market-place effectively to determine the types of employees needed. The "needs-matching" process to get the right person to do the right job is another great concern in HRM.

Another concern will be the steadiness in the execution of the best HRM practices in an business. Only long-term uniformity in the tactics can bring great results and achieve sustainable competitive advantage rather than just short-term success. Determination from the top management can be an important factor that will determine the success. Total organizational dedication can't be achieved without beginning with the most notable and working down. If the very best management began to demonstrate good routines, concern and determination with their job and products, the employees will also commence to check out the same methods and further synergizing their contributions to execute for ecological competitive advantage.

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GE - Standard Electric Co.

HRM - Human being Resource Management

IHRM - International Man Resource Management

KPI - Key Performance Indicator

MD - Managing Director

MNCs - Multinational Corporations

PM - Performance Management

PMRS - Performance Management and Incentive System

SIA - Singapore Airlines

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