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Globalization and Their Impact on the HR Function
Globalization has influenced various dimensions in many aspects human resource operations. Companies have focused to incorporate the concept of globalization in every developmental process in order to become truly responsive and adaptable in modern inconsistent community. One sector that is affected greatly by globalization is the economy (Ali, 2005). In order to adapt and survive the pressure of globalization, many human resource departments have engaged in diversifying their corporate policies. Moreover, various companies have developed approaches in terms of business management and human resource in order to cope up with the changes brought about by economic globalization (Bawa, and Ali, 1999). New business strategies and human resource practices are indispensable to satisfy the demands of globalization.
Ali (2005) described globalization as the process of rapid economic, cultural, and institutional integration among countries brought about by the merger or reliance among nations (Ali, 2005). This occurs in terms of trade and investment, the technological developments and market competition within the international setting. According to Mihir (2008), globalization reduces the barriers between countries which will result in “intensification of economic competition among nations, dissemination of advanced management practices and newer forms of work organization, and in some cases sharing of internationally accepted labor standards” (Mihir 2008, p. 73). With the global impact of international reliance for survival and economic development, it is important to focus on the influence of globalization on the Human Resource function as a vital component of corporate success.
Prilleltensky, (2012) argues that globalization refers to “transmission of persons, processes, and products from one part of the world to another” (Prilleltensky, 2012, p. 612). In this respect, through globalization there are three essential elements that are involved – persons, processes and products, which are all linked to one another (Ali, 2005). Globalization increases employment competitiveness as professionals can be hired in different parts of the world. Therefore, people’s ability of searching employment is one important element of globalization (Bawa, and Ali, 1999). Secondly, process/processes are gaining wide recognition in the globalized world. Improvement and developmental processes is the norm in the global business (Prilleltensky, 2012). They entail improved transmission or business exchange between and among markets. The third element is the product, which means that in order to be considered globally functional, companies must be prepared with product innovation, quality and development.
There are three main forces, which have driven up the emergence of globalization. These are technological advancement, economic interdependence and international market competition. Technologies have developed nation and have introduced changes that few years ago would not have been possible (Ali, 2005). The proliferation of advanced communication system such as mobile phones, internet and computerization has made it easier to deal business in any other parts of the world. The banking, finance and the economic sector have benefited greatly from globalization. In terms of economic interdependence, countries are continuously increasing efforts to better their economies by relying upon the other countries especially through the import-export system and trade exchange thereby increasing income and profit for globally competitive countries (Ali, 2005). The international market is constantly dynamic hence; companies must always be at the top of market development not only pertaining to product quality enhancement, but also in terms of human resource management and advancement. In fact, most companies are focusing in attaining progress in a globalized economic and financial world. To accomplish the competitive advantage a company’s Human Resources department must play a key role.
Mihir (2008) observes that companies that desire to survive in the global market faces overwhelming concern on employee management due to cultural, legal and business differences among countries. Additionally, in order to be internationally competitive, companies must hire globally competitive individuals who are competent in global issues (Bawa, and Ali, 1999). Moreover, the employees must be innovative in global matters to ensure achievements of goals.
Consequently, Human Resource is the core of corporate success especially if the goal is to become a globally competitive market industry. Globalization entail practical and intelligent decisions on human resources functions such as recruitment, selection, motivation, compensation and personnel development (Bawa, and Ali, 1999).
Ulrich (1996) has identified significant roles that human resource has in businesses, which are first, as a strategic partner tasked with the obligation to parallel human resource and business plan. Secondly, as administrative expert to improve organizational policies and deliver human resource services. Thirdly, as an employee advocate in response to employees’ needs. Fourth as a change agent tasked to manage changes to carry out effectively the functions of the organization (Ulrich 1996, p. 75). Therefore, human resource department in every company carry out important functions that satisfy the demands of globalization.
Human resource functions focus on the huge role that human capital has in the corporate success. In the advancement of technologies most industrial business human capital are replaced with modern technologies (Bawa, and Ali, 1999). With the advent of globalization, however, the tasks of human resource management have become more stimulating and challenging. Moreover, human resource plays a crucial role in the development of the employees’ and that of the organization’s potential.
The primary roles of human resource or personnel management are recruitment, compensation and separation from the organization. In some organization, human resource is under-funded hence; business managers and executives do not use or tap the full potentials and capabilities of their employees (Ali, 2005). This result in talent and knowledge wasted, and results in negative impact to the organization. With the emergence of human resource management concepts, the corporate world has been deeply improved and the effects are immediately felt by the organization thereby stressing more on the policies, processes and scheme (Bawa, and Ali, 1999). These will further enhance the human resources within the organization. Moreover, the concepts on human resource development through performance evaluation and appraisal, motivation such as providing incentives are very essential (Mihir, 2008). In the contemporary set-up where globalization may either pull up or pull-down a company, human resource do not adopt to the demanding and challenging business world and make themselves competitive.
Mihir (2008) discusses several challenges that globalization poses to human resource management such as “rapid technological change, tougher competition, and organizational changes such as new organizational alliances, new structures and hierarchies, new ways of assigning work, a very high rate of change, changes in the workforce, including employees’ priorities, capabilities, and demographic characteristics” (Mihir, 2008,p.81). These significant concerns facing companies operating in the international level has awakened the corporate management to reinvent and realign its policies and processes. In a more specific way, Bawa, and Ali, (1999), has effectively identified a way on which globalization may affect human resource functions. In a global perspective where there is interdependence among nations new markets are being opened hence, emphasis is placed on the role of human resource management in an organization, which is geared on gaining market advantage over other countries (Bawa, and Ali, 1999). In order to achieve this goal however, human resource management is not only required to do its traditional functions, but rather it must delve into a deeper empathy on human resource practices and schemes of different countries (Ali, 2005). The reason behind this is that the distinct and diverse cultures, policies and laws different countries as well as numerous economic matters poses great impact on their organizational success because of their global operation.
Indeed, effective human resource management has become a strong indicator of corporate success, within the global context (Ali, 2005). With the emergence of the various international factors affecting globalization, those who managed to survive will emerged as victorious, and those that will not survive are affected negatively by the highly competitive international market (Mihir, 2008). In this regard, companies entering the international business scene must be ready in terms of product innovation and human resource management.
Ali, A.M. (2005). Globalization and Industrial relations of China, India, and South Korea: An argument or Diveregence, http://www.uri.edu/research/lrc/Papers/Ali_Globalization.pdf#search=’Mohammad A ali at University of Rhode island’
Bawa, M.A and Ali, J. (1999). He Challenges of Globalization and the Role of Human resources. http;// econ.tu.ac.th/iccg/papers/aminu.doc,
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Prilleltensky, I. (2012). The What, Why, Who, and How of Globalization: What is Psychology to Do?, Journal of Social Issues, Vol. 68,No. 3, 2012, pp. 611—628, retrieved at http://www.education.miami.edu/isaac/public_web/globalization_paper_JSI.pdf-
Ulrich, D. (1996). Human Resource Champions. Boston: Harvard University Press.