International and Comparative HRM

1 International and Comparative HRM International and Comparative HRM Introduction Technological advances in the recent years have brought about high integration between nations as the physical limitations and barriers, such as continental and international boundaries have all been eliminated. As such, people have found it easy to move from one global location to the other in search of employment and education, while organisations have extended their operations to other countries in search of markets and raw materials. Improved communication quality is particularly responsible for the increased integration as distance no longer matters whenever parties need to get in touch at any given time. However, the globalisation affects organisations in various aspects, among them the issue of human resource managers. Cultural, ethical, and equality issues crop up as organisations try to extend their operations from their home countries to other different countries. The Coca-Cola bottling company, for instance, operates in all sections of the world and has adopted a personnel strategy where different approaches are used depending on the unique situations of a particular host country. This paper will discuss in detail the human resource function and its general operations in the globalised world while making specific references to Coca-Cola Company.

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2 2.0 Effects of globalisation on Coca-Cola’s HR function 2.1 Main tensions Cultural challenges Every individual worker subscribes to some cultural tenets which describes his background and way of upbringing. As such, everybody would work best in an environment or society where our varied cultures are acceptable and tolerated by everyone. Coca-Cola, like any other multinational corporation, is facing the challenge of cultural conflict on its expatriates, a factor that affects the eventual productivity of such workers. By extension, the problem of cultural challenge also affects the overall productivity of the company where the workers are based (Gootenberg, 2004).

Coca cola has an equity policy which ensures that the company provides equal opportunities for employment to all, without discriminating on the basis of their gender, creed, skin colour, or race. However, the company faces a huge challenge in societies where such practices are actually considered as the norm. In the Middle East region, where Islam is the dominant religion, women are often discriminated against when it comes to employment issues.

Although there are qualified women in these countries, the cultural practise and belief does not allow for members of this gender to be hired as workers alongside their male counterparts. It becomes difficult in this scenario for Coca cola to achieve its goal of equal employment to all members of society because in such an instance, the male workers might not readily accept to work together with their women colleagues. It is also difficult to find women applying for positions in these countries because they have been brought up with the belief that they are of a lesser value as compared to men (Singh, et al. 2005).

3 With operations in more than 200 countries, the human resource function at Coca-Cola has to ensure that its expatriates have an idea about the general culture of a country where they intend to post their workers. It is not an easy thing to achieve, especially considering the fact these experts would be required to move in a number of countries to undertake their roles and responsibilities. Thus, the human resource department is forced to send its staff for acclimatisation purposes prior to their official deployment. This practise is costly as the company foots all the bills accrued during acclimatisation, at a time when the direct productivity of the individual worker is almost zero (London & Hart, 2004).

On the other hand, alien climates and cultures often tend to affect the performance of some workers. The HR function is, therefore, expected to ensure that an impending deployment will be helpful in enabling the company to attain its goals and objectives. Determining this sometimes proves to be a challenge because it is not as easy and direct as it may sound. Equally, the workers in the host nation may have a negative attitude towards expatriates deployed to assist with technical tasks and roles. Their actions could mainly be driven by the feeling, or imagination, or thought that such a position should be taken by one of their own and not a foreigner. It is upon the human resource function to ensure that such kind of friction is tamed and limited so as not to affect the performance of the company (Gupta & Govindarajan, 2005).

Legal systems Different countries have varied legal systems which suits their unique existence and position. Often, it is a requirement that individuals and companies seeking to operate within these jurisdictions have to fully comply with the laid down rules and regulations. In many instances, the national laws do not go in tandem with Coca cola’s own corporate rules and

4 procedures. Thus, the company is forced to realign its corporate rules and laws in order that they may fulfil the legal requirements of a host nation.

This poses a challenge, especially to the internal structures of the company because it means they have to alter their activities as well. It, therefore, becomes difficult in this instance for the company to have a single and overall global policy on its human resource activities. For instance, the minimum age limit for employment is 18 years in some countries where Coca cola operates, while in others, the same limit is set at 17 years. In this regard, it becomes difficult for the company to settle for a corporate age limit of employment because it could easily clash with the legal requirements of some host countries (Tuathail & Luke, 1994).

In general, these numerous differences in legal systems and requirements affect the overall operation of the firm. In some instances, the company ends up on the wrong side of the law because of pursuing what is considered its corporate ethical practise. Legal experts who have mastered the local laws must, therefore, be employed in all the countries where Coca cola has set up operations in order to advise the human resource function accordingly in as far as their personnel activities are concerned (Saner, Yiu, & Sondergaard, 2000).

Organisational structure Being a multinational corporation, Coca cola has adopted a decentralised structure in its operations. Currently, however, the company follows a standardised job structure that reflects on the global outlook, particularly for senior management roles and positions. This structure has proved problematic since not all regions or countries have the same characteristics with regard to such aspects as labour skills, expertise, and availability of labour force. In other words, an organisational structure that produces results in one country will not necessarily work in another country.

5 The internationally structured job analysis and design is not working perfectly for the company as the environment is not uniform. Additional skills and expertise are required in some other countries because of the exceptional nature of the local job market. An international structure fails to consider the small details that exist in individual countries and, instead, gives it a blanket analysis. This has the potential of negatively affecting the performance of employees.

On the other hand, executing a decentralised structure and system also poses challenges to the overall management of the firm. It would be expensive for each subsidiary to carry out its human resource functions independently because achieving control and coordination would be very difficult. The overall policies of the company must be enhanced and sustained through a common system and not one which is highly complicated because of being fragmented.

Job analysis and design is especially a critical area in the human resource because it leads to the structuring of training programmes, building of employee relationships, and performance appraisals. All these aspects are important and need to be treated specially with the unique concerns of each country (Gootenberg, P. 2003).

Stakeholder challenges Historic, religious, and other ideological differences or backgrounds continue to affect the performance of the HR function in global countries. Origins of companies or their individual originators sometimes determine the extent of successful performance for these organisations.

For instance, some countries in the Middle East region, such as Iran, have had very frosty relations with the United States of America, where Coca cola originates. The reason for these poor relations has often been attributed to religion differences between the two countries. Other countries which have remained on the USA’s bad books include Cuba and South Korea for reasons mainly cited as differences in ideology.

6 These stances occasionally are taken up by the nationals involved who take hard line positions as far as products, services, or even companies from the perceived enemy state is concerned. Thus, the simple fact that Coca cola originates from the USA is enough to deem it in bad light in any of these countries. Qualified and skilled workers from these countries would turn down the offer to work for the company’s subsidiaries situated within their country. This paralyses the operations to a great extent and forces the company’s headquarters to export workers from other countries so as to be able operate their investments. This is a complex arrangement which is bound to have a lot of hiccups because the alien workers will also be affected by numerous challenges which will offer them little support in their roles and responsibilities (Clougherty, 2005).

2.2 The need by the HR function to develop different HR strategies Training A multinational corporation carries out its operations in different countries. These countries or varied environments do not have the same characteristics and features at the same time. A Coca Cola Company subsidiary in Canada, for instance, will not face problems of lack of skilled labour as would be the case in other small and developing economies. The human resource function of any global firm needs to design strategies that will directly address issues of member states. In advanced economies such as Canada where a substantial size of the population is highly educated and skilled, the HR function’s strategy should be to look for ways of sustaining greater performance and efficiency. Thus, the use of advanced technology should be the target here as many of the workers are better placed to operate the machines and technology in aid of their performances.

7 On the contrary, a Coca Cola subsidiary in the developing world, such as in African states, although would still require technology and machines, the main strategy here is to train the workers so as to enhance their performance. Comparatively, there is plenty of labour force in Africa but a majority remains less skilled. Introducing advanced technologies in such countries would be costly because the company needs to target training of workers in order to improve on their level of skills. Another supplementary strategy in this instance would be to bring in a number of expatriates from countries with very high skills in order help in executing different roles, as well as help in training the local workers (Kent, 1997).

Recruitment process Recruitment processes cannot be similar in all the countries where a multinational corporation has set up operations. The level of skill and expertise varies a great deal across board and therefore adopting a common strategy would produce poor results in some countries. Coca Cola’s recruitment strategy is actually organised into regional franchises in such a way that they reflect on the specific situation on the labour market. Whenever these franchises need to recruit additional workers, the head office analyses the situation before authorising the go ahead. Once approved, the local franchises conduct the hiring activity, but do it according to both the local and international practices of hiring new staff.

Among the recruitment policies of the firm include offering equal opportunities of employment to all members of the society, such as the physically challenged, the minorities, gender balance and equity, people with varied sexual orientations, as well as unbiased racial considerations. This is the corporate policy which takes precedence even when local franchises are acquiring new workers. However, regional challenges may force that some of the corporate ethical considerations be dropped or overlooked. In such an instance, the franchise’s local

8 strategy of recruitment applies. For instance, most Muslim states do not consider the granting of equal opportunities of employment to both genders. In such countries, the local subsidiaries have the freedom to recruit more male workers because the society forces the situation to take such a precedent. Thus, Coca Cola does not forcefully impose its strategies and plans of recruitment on members of the local society because it will have negative repercussions (de Vries, Doyle & Loper, 1994).

Wages and compensation The Coca Cola’s HR function has designed a compensation structure as the basis of its payments to all its workers across the globe. The pay structure is not rigid as it does not demand that all subsidiaries adhere to specific figures for salaries and wages. However, the basis of the pay structure is to offer guidelines about what the local human resource manager should consider as he determines payments for workers. These determinants are not uniform as they vary depending on varied issues afflicting the economy, as well as the country in overall. The local Coca Cola franchises have their own policies on compensation of workers which directly reflect on the economic position and power of a country (Guarneri, 2002).

In the USA, for instance, the standards of living are comparatively very high as compared to developing countries in other parts of the world. The salary and wage rate in USA cannot be the same as the one earned by a worker or casual employed in the developing world. For a high standard of living, it means the workers must also earn higher wages and salaries because even the markets can sustain such high costs of operations. A can of Coke soda in America goes for a much higher value than the same can of soda sold in a developing country. Ideally, Coca Cola has adopted an equitable pay structure that is relative to the general living standard and quality of life in different host countries. It is also relative to the cost of doing business in those countries,

9 including availability and cost of acquiring raw materials, cost of other utilities such as water and electricity, among other related costs. It does not follow a uniform salary figure for all its workers because that would prove to be unfair to many workers (Giuliani, 2007).

2.3 Talents required Different countries of the world are endowed with different talents. Some countries produce very good technicians and a lot of innovations while other countries produce plenty of such professionals as marketers, accountants, doctors, or even managers and company executives. Global firms also face this kind of a challenge in their numerous operations. Coca Cola hires expatriates and sends them to countries where there are limited skills in certain areas so that they may help in execution of roles and duties. However, it is not an easy task for the company as different issues abound (Bose, 2008).

It is very expensive to acquire and sustain talented expatriates because often, their compensation rate is high. Such expatriates demand for allowances because they work from a different location from where they would have preferred. Those with families often travel with them to their new countries of residence and the bills incurred for their upkeep is normally paid up by Coca Cola. Even in instances where such expatriates leave their families behind in their countries of origin, it is the company that takes full responsibility of their upkeep, including paying school fees and other necessities. Overly, acquiring and ferrying talent as expatriates for global firms is usually expensive (Forman, S. & Segaar, 2006).

Another alternative for the acquisition of talent for global companies is the training and developing of local workers in order that they may acquire the skills and talent as well. This, too, is an expensive venture as it means the company foots all the training costs incurred by the workers. Sometimes, Coca Cola is forced to take the workers on training abroad so that they may

10 acquire first hand and quality knowledge from advanced institutions. In secluded instances, such workers, on graduating, refuse to return home, or are lured by other companies which promise them higher salaries than what Coca Cola is offering. Thus, it becomes double loss for the company as they still miss out on the services they had anticipated for and developed (Mattei, 2003).

Conclusion Global firms expand their territories and establish their operations in foreign countries as they seek to expand their markets and sustain growth. This idea has been enhanced mainly by the integration of the internet and other improved information technologies. The world has thus become tiny as it is now easier for people and companies to communicate and keep close contact with each other regardless of the physical distance involved. However, these global firms are faced by a number of challenges which threaten their operations and overall existence. The difference in national cultures poses a challenge as the company’s policies are forced to be altered or formulated a fresh in order to accommodate the new populations and group of workers.

Foreign expatriates also find challenges to operate in new cultures that they are not used to. The new environments affect their productivity and thus the eventual productivity of the company.

Other new systems that the global firm has to contend with include new legal systems, lack of skills among workers, as well as differences ethical issues. Global firms have designed counter strategies that intend to make their operations smooth and possible, including adopting decentralised control strategies that give room for franchises to adopt customised strategies that best suit their unique position.

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