What is the Importance of Human Resource Management for Business?

Importance of Human Resource Management: Human resource management in an international business plays a significant role at the strategic level. The executive manager of human resource management in an international business actually acts as a decision-maker & strategic partner of the business organization.

The complete comprehension of the overall global system is essential so that the productivity of the employees of the entire organization is maximized. Human resources must also be global in nature in relation to its global organization.

The role played by human resource management in international business should be oriented positively towards international human resource management along with the identification of the strategic role that must be executed. The importance of human resource management for international business can be explained in the following ways.

Importance of Human Resource Management

1. Stages of International Involvement:

When an organization initiates international operations, then it has been passed through five stages which are as follows.

• Domestic Operations
• Export Operations
• Joint Ventures or Subsidiaries
• Multinational Operations
• Transactional Operations

As the organization passes from a lower stage to a higher stage, the human resource functions need to be more adapted to the diverse economic, cultural, legal & political environments.

For example, when the human resource management is passing through stage five (transactional stage), policies & procedures should be developed & implemented that maintain diversified employees belonging to different cultural backgrounds in order to develop the identity of share corporation along with a common vision. The global business evolves through the following stages.

• Exporting
• Licensing
• Franchising
• Multinational Corporation
• Global Corporation

It really enhances the importance of human resource management for multinational companies.

2. Global Human Resource Management:

The human resource policies & procedures should be employed that best meet the global requirements so that the wider organizational objectives can be achieved. The human resource management in an internal business should be operated similar to the domestically operated HRM by promoting the more integrated working system.

3. Global Staffing:

For the achievement of the goals of the international organization, the specific jobs should be filled with specific individuals at the proper time and proper place. For this purpose, there must be global human resource planning, recruitment & selection procedures for obtaining the required employees.

• Types of Staff Members:

The following are different types of employees that can be acquired by global organizations.

Expatriate: Expatriate is an employee who is working in an international organization and he is not the citizen of that country in which he is currently working, but he is the citizen of the country in which the headquarter of the international organization is located.

Host Country National (HCN): Host country national is the employees who are working in the international organization & he is also the citizen of the country in which he is currently working. But the headquarter of the organization is located in some other country. Most of the employees working in international organizations are host country nationals.

Third Country National: Third country national is the employee belongs to one country and who works in the international organization in another country, but the headquarter of the international organization is located at some third country.

• Approaches to Global Staffing:

The following are some of the approaches to global staffing.

Ethnocentric Staffing: The higher-level foreign positions in an international organization are filled with expatriate employees.

Polycentric Staffing: In this kind of staffing, most employees of the host country are hired by the international organization for many tops to bottom level positions.

Regiocentric Staffing: It is similar to polycentric staffing, but in this case, the regional subsidies of the international organization work together as a single unit.

Geocentric Staffing: In this kind of staffing, the international business used a worldwide integrated strategy.

In all kinds of above staffing methods, global training & development are required because of the differences in the people, jobs and organizations.

4. Global Human Resource Development

• Expatriate Development:

In this kind of training & development, the process is initiated immediately after the selection of the employees and even if the operations of the international organization do not start.

• Repatriation Orientation & Training:

Before the repatriation, training & development are essential to be started in which the expatriates bring back to the home. The employees and their families are provided with orientation & training to prepare them for the return to the culture of the home country & to prepare other supervisors & subordinates of the expatriates for the return.

5. Global Compensation & Benefits:

Because of the pressures of a high wage rate, organizations are compelled to operate in other areas of the world in order to maintain competition globally. Generally, the level of global compensation is lower. However, when the global compensation packages are developed by the organization, certain factors must be considered prior to living costs, variations in the laws, tax policies, etc.

6. Global Safety & Health:

When the employees in the (international) organization are safe & healthy, they are turned into more productive & beneficial. So the human resource management in an international organization prepares & implements certain safety & health-related programs for making their employees more beneficial & productive.

Usually, the US-based global operations are regarded as the much healthier & safer than the operation of any other host country. But the operations conducting in the United States of America are much safer & healthier. So, all the international organizations should consider the working environment standards & other safety programs of the organizations that are belonging to and working in the United States of America.

Above are just only a few ways of the use of human resource management in the business organization. There are a lot more functions of human resource management, which also indicates the importance of human resource management for multinational companies.