Cultural Foundation of IHRM-Understanding Culture

Multinational organizations usually face a number of problems while conducting their business in underdeveloped or developing countries due to huge cultural differences. According to Jaeger & Kanungo, (1990), ‘MNCs operating in many countries with different socioeconomic and cultural orientations face serious challenges in implementing Western HRM practices in the developing countries’. Even though cultural variables play an important role in determining whether an HRM policy is a success or a failure, but the effectiveness of the policy depends on the manager as well. According to, Eveg & Eqile, (1993), ‘Effective implementation of HRM practices is largely dependant on the extent to which the practices are perceived to be appropriate by managers and their subordinates’. Human resource managers should have a thorough understanding of all the cultural variables before implementing a strategy so that they can maximize the output of their human resource. (Abdullah, A. et al., 2006)

Due to rapid globalization companies now have to conduct their business overseas. This requires proper management of the home country, host country and third country employees. According to Ann Rennie and Rita McGee, (2012), ‘International HR management refers to an extension of HR that relates to having people working overseas. These can be either expatriate staff, those who are recruited from or work within their own home countries (locally recruited staff), or even third-country nationals (individuals from neither the ‘parent’ nor ‘home’ country, but rather third country.’ (Rennie & Mcgee, 2012). A human resource manager is a key employee in the organization and according to Coro Standberg, (2009), ‘Human resource managers are well positioned to play an instrumental role in helping their organization achieve its goals of becoming a socially and environmentally responsible firm – one which reduces its negative and enhances its positive impacts on society and the environment’. (Standberg , 2009)The human resource managers perform a wide variety of functions. The Michigan Civil Service Commission has described the duties of the human resource manager as follows, ‘Employees in this job function, as professional human resource managers, direct the work of professional staff. The employee, under general or administrative supervision, works within general methods, procedures, and exercises considerable independent judgment to select proper courses of action. The work requires knowledge of the policies, procedures, and regulations of personnel management and human resources development programs, and supervisory techniques, personnel policies, and procedures.’ (Human Resources Manager, n.d.)

Hofstede’s Dimensions of Culture

Hofstede described five dimensions of culture which are as follows, Individualism or collectivism: It describes the level of relationship between an individual and other individuals in the society.Power Distance: The extent to which the culture allows the misuse of power.Uncertainty Avoidence: The way in which any specific culture handles the unpredictability of the future. Masculinity/Femininity: The importance that a culture gives to different values and practices that are related to the male and female gender.Long-term/Short-term Orientation: It describes that whether the cultural values focus on the past or present or the future. (Wiletzky, R. et al., 2009)

Impact of Culture on Human Resource Policies and Practices.

There is a clear link between the cultural variables and the HRM policies of the organization. Mostly culture has an impact on the structure of the organization. It also has an impact on the recruitment style, the manner in which the employees are paid and the pattern of compensations and benefits. For example, an organization may opt for performance based pay if it is operating in a country which is ranked high on individualism. (International And Comparative.., 2001)

Impact on Recruitment and Training: The workforce recruitment for overseas assignments is quite different from that of domestic assignments. As the employees have to work in an entirely different culture so due to this cultural difference, the third country or home country employees are selected on the basis of their experience of working internationally, their ability to speak various languages, the extent to which they can handle stress, their experience with different cultures and their personality (extroverted people are the preferred ones). The ideal candidates is the one who has got managerial competence and is willing to get trained about the culture and the language of the country in which the organization is operating and is adaptable that is he can adjust in the culture of the host country. (Portolese Dias, L. , 2001)

Impact on Training: Employees are generally trained about cultural components when the business is conducted globally. The purpose of the training is to help employees accommodate in the new culture while they are overseas on assignments. They are not trained regarding new technologies instead the major components of training are language, culture, goal setting and managing family and stress. Cultural training is very important for the success if various assignments, although cultural issues are not discussed openly but if managers are not aware of the cultural norms then they can fail badly. For example, when Revlon expanded its business in Brazil, the company launched a perfume with Camellia flower scent. The managers obviously did not know that Camellia flower was used in funerals in Brazil and the product failed badly. (Portolese Dias, L. , 2001)

Impact on Compensation and Rewards: When working in different cultures, organizations may go for a standardized payment method. This means that no matter in which country you are working you will be given the same salary. But this strategy ignores the fact that the livelihood in one country can be expensive as compared to the other country. Therefore, organizations usually pay their employees through a banding system which is based on regions. This payment strategy is known as alocalized payment strategy. Microsoft and kraftwoods use this strategy. (Portolese Dias, L. , 2001)

Impact on Performance Evaluation: There is a great deal of confusion regarding who should rate the home country employees. Cultural differences make the evaluation process ineffective as the host country managers may rate the home country employees harshly or they may rate them politely. For example, in Indonesia employees and managers value harmony, so the managers may rate the home country employees high in order to maintain harmony in the organization. (Portolese Dias, L. , 2001)

Impact on HR Priorities: Culture has an influential impact on human resource priorities as the first priority shifts from employee retention to leadership development. And in q global environment the managers are not highly concerned about employee retention rather they are interested in developing leaders who can survive in the new culture and can train their workforce to operate effectively in the global environment. (Rioux, S. et al., 2003)

Roles Played by an International HR Manager

Due to the increased internationalization, the human resource department and its responsibilities have changed a lot. The human resource management is the most important business aspect in today’s culturally diversifying and growing world. Almost all the organizations are developing their HRM functions as major structures that support the globalization and internationalization process. (Sparrow, 2006) The HR managers have to play an important part in managing the vastly multicultural environment of an organization (especially in case of multinationals and organizations with international employees). (Abrams et al., 1998) On the whole the functions of the HR managers can be categorized as follows:

Planning the HR of an organization: It is the most important and critical function of the HR managers. Planning the HR has many phases including the determination of the number of HR required in various departments or business units, number of HR that should be made redundant, desired professional and other competencies of the new vacancies, possible transfers etc. (Armstrong, 2003)

HR managers can make the organization an efficient work place by planning the human resources in the most suitable manner. When an HR manager conducts the proper planning before hiring the employees at a new overseas branch of a multinational organization, it would lead the organization to have the best possible employees inducted and transferred from other locations. The manager would be well aware of the job requirements and will end up having the most suitable candidates, who are well taught in their areas to contribute towards the progress. Further, the cultural issues that might arise will be highlighted beforehand; therefore, precautionary measures and steps will be taken to avoid major issues. (Sparrow, 2006) This also includes designing and implementing the most efficient global HR policies. (Farndale & Paauwe, 2005)

Recruitment and Selection: Recruiting and selecting the most suitable candidate for any vacancy is also an important function of HR manager. As a selection of the most appropriate candidate will lead the effective management of the job and timely completion of the tasks. This will positively contribute towards the success of the organization. (Ansari, 2011)

Since, human resources contribute directly towards the success and failure of any Organization, especially those working around the globe, the HR manager has to take into consideration the local as well as international requirements and available candidates throughout the globe. (Sparrow, 2006)

Exercising this function properly emphasizes on the selection of the suitable international employees that meet the requirements of a job and lead the organizations towards the achievement of their vision, as well as ensuring compliance with the requirements of the host country. Recruitment and selection function of the international HR managers also grants the organization acceptance in a new culture and location by smartly recruiting the locals and gaining the trust of the new society. (Gilmore and William, 2009)

Employee Participation and Motivation: In order to succeed as a multinational and multicultural organization, the HRM function should take steps to keep the employees motivated by creating and maintain a culture of mutual respect and understanding between all the employees. (Aswathappa, 2005) Cross cultural issues, religious and social diversifications, society issues etc shall be eradicated from root and an environment of open mindedness and general acceptance shall be created to ensure full participation of all the employees. HR managers play a crucial role here by designing policies, conducting surveys / trainings etc to help employee gel with each other. Making teams and groups to carry out certain tasks and organizing events (such as dinners, picnics, etc.) also help in achieving the state of maximum employee motivation and participation. (Farndale & Paauwe, 2005)

Performance Management and Appraisals: In order to ensure the continuous development of the employees and to check out that the cross cultural and other differences are not interfering with the success and growth of the organization, the HR managers play a grand role in developing and implementing the performance measurement and appraisal policies. By conduction regular appraisals the defects and issues can be highlighted and communicated at all the levels, ensuring early resolution of all the problems and eradication of potential problems amongst the employees or with any specific employee. Here too the mangers of to use tact and intelligence to stay away from society issues and pressures regarding local and international employees respectively. (Brewster et al., 2011)


Culture has a critical influence on the human resource management policies and practices and if the management aligns its strategies with the cultural variables then this would result in increased employee commitment and can result in cost effectiveness as well. When employees would be aware of the norms and values of the culture in which they are operating then they would conduct their work according to those norms. By training the employees according to the cultural requirements organizations can increase their customer satisfaction level as well, because the employees would better entertain the consumers. Human resource is the most valuable asset of the organizations and while operating overseas organizations must align their human resource policies and practices with the cultural variables so that the employees may perform at their best possible level. (Gomes, S., n.d.)With the rapid globalizations and internationalization of organizations, the trend for hiring cross cultural employees have brought forward a lot of issues and problems for an organization. This includes rejection of an organization by a society, cross cultural issues, communication gap, lack of employee motivation and participation. The growing trend of globalization and hiring international employees leaves a huge cultural impact on the HR management policies and techniques. The HR department of an organization plays a vital role in the successful growth and globalization of an organization along with developing and adopting policies to the need of the internationally established and diversified organizations.

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