Organizational Structure for International Expansion
Question:
Discuss about the Managing Employee Performance and Reward Concept.
Human resource Management (HRM) is an important function of an origination which is designed to improve the efficiency and productivity of the employees. It consists of all the activities relating to human resource and people (Mathis, Jackson and Meglich, 2016). It includes staffing, recruitment, training and appraisals of the staff. The present report is based on Winch-It Company which is planning to expand their business overseas. The Board wants to adopt a cautious approach and they want to understand all the issues related to business expansion including HRM in international business. The report focuses on the type of organizational structure, cross cultural management, performance management and staffing options of Winch-It Company.
Winch-It Company has performed well in the domestic market. It is important for them to expand their business to other countries as well. They have already captured the domestic market and there is limited scope left in it (Shields, Dolle-Samuel and Plimmer, 2015). International market will give them ample of opportunities to grow and develop their business. But it is difficult for a company to decide its organizational structure and it becomes more complex during international expansion. An effective organizational structure can improve the efficiency and performance of the company in global market (Jabbour and de Sousa Jabbour, 2016). Winch-It Company should adopt a Global Functional Structure in their overseas business. They can appoint a CEO which will take care of the business in the foreign country. The Board is also interested in international expansion. But they should not use ‘One of their own’ strategy. They should appoint a CEO who is a resident of the country. He should understand the needs and preferences of the people. It will allow the company to adapt to the business environment and perform better in their business. A Global Functional Structure is suitable when the company has few products (Beadles, Aston and Johns, 2015). It involves horizontal integrated organizational structure. For example, McDonald and Pepsi follow this structure in different countries. The Chief Operating Officer is responsible for coordination and integration of different activities in the business. Winch –It Company should adopt this structure and leave all the decision making to the top level management in the particular country. The functional heads will fulfill their roles and responsibilities using a tunnel vision orientation (Abdullah and Zulkifli, 2015). They are advised by top level management for implementation of change or improvements. Global functional structure is recommended to Winch-It Company because it will help them to manage their domestic as well as international business in an effective manner. The main advantages of Global Functional Structure for Winch-It Company are:
- Reduction in overheads
- Clearly defined career path for the employees.
- It is the best suited structure for international expansion (Shields, Dolle-Samuel and Plimmer, 2015).
- Economies of scale due to functionally based organisation
- Central HRM function can serve the entire organisation effectively.
- Standardized policies, procedures and practices.
Cross cultural management is essential for international expansion (Salas, Shuffler and Lazzara, 2015). It will help Winch-It Company to adapt to the business environment of the country. They will be able to provide more customized products and services to the people. Winch-It Company should adopt individualized communication approach in international market. It will allow the company to understand the market conditions and they can make changes in their strategies according to it. This approach will be helpful for the company in their communication and promotional campaigns. They will be able to develop their knowledge and understanding about cultural diversity (Shields, Dolle-Samuel and Plimmer, 2015). Furthermore, they can improve their problem solving skills by avoiding cross culture miscommunication. Some common issues faced due to ineffective cross culture communication:
- Inability to adapt to different business cultural expectations
- Lack of planning in business approach which takes long time for business to adapt (Abdullah and Zulkifli, 2015).
- Problems in decision making and negotiation.
- Lack of trust in the company.
Cross Cultural Management
Winch-It Company should provide training to their employees so as to ensure better communication and high performance. They should be able to develop relations with other members of the company as well as the customers (Mathis, Jackson and Meglich, 2016). The entire business should be customer centric and all the decisions should be taken accordingly. Winch-It Company can uses Hofstede’s cultural dimension theory to understand cultural dimensions. This will allow them to identify various factors such as degree of individualism, power distance, masculinity and uncertainty avoidance. HR team should promote cultural diversity in the company. HRM policies have to be developed so as to manage cultural diversity in the company (Importance of HRM. 2016 ). Communication plays a vital role in the success of a business. Winch-It Company has to maintain effective communication with the stakeholders as it is important for new overseas venture.
Winch-It Company has to adopt international staffing strategy in their overseas operations. The HR policies and staffing procedures should be according to the business environment of the overseas market (Beadles, Aston and Johns, 2015). The company should not adopt the same HR policies which they have implemented in the domestic market. They should give freedom to the overseas business so that it can frame its own HRM framework. The Board of Winch-It Company wants some of their people to run new business. They can adopt this strategy but they have to ensure diversity in their foreign business. They should use ethnocentric approach in which the people from home country lead the foreign company (Huang, & Zhu, 2016) . It will help them to establish the same corporate culture in the other company. But this approach has many disadvantages which will affect the company and its operations. Instead of this, they should use Polycentric approach in their overseas company. It will fulfill the demand of the board as well as the objective of the business. Winch-It Company has to appoint a home country senior as well as foreign country senior. The host country official will get the support from the foreign executive (Latorre and et.al, 2016) . It will reduce complexities in the business and the company will be able to adapt to the changing needs of the overseas market. Therefore, the best staffing option for Winch-It Company is to adopt Polycentric approach. It includes senior management from both domestic and foreign country. They take all the decisions together keeping in mind the requirements of the overseas market. Apart from this, they should maintain cultural diversity in their company.
Winch-It Company should monitor the performance of overseas business. They have to bring changes in it at regular intervals to remain competitive in the foreign market. Effective performance management helps the employer to communicate the objectives and results of the business to the employees (Shields, Dolle-Samuel and Plimmer, 2015). But there are certain issues which Winch-It Company should consider before expanding their business:
- Development of strategic plan: Winch-It Company should develop right metrics according to the strategic plan of the organisation. Many companies fail to establish a balance between short and long term goals of the company (Beadles, Aston and Johns, 2015). The company should develop plans for domestic as well as foreign business. They should include foreign officials in the designing and planning stage. The performance of the business should be reviewed at regular intervals and corrective measures should be taken in case of any discrepancies.
- Problems in standardized tools and techniques: Performance management includes tools such as productivity, efficiency, profits, revenue generation etc (Mathis, Jackson and Meglich, 2016). Apart from this there are also qualitative parameters for employees such as leadership, judgment, motivation etc. The main issue is to decide whether the domestic and foreign business will have the same performance parameters or not.
- Performance is also dependent on economic indicators and different methods adopted in the country (Salas, Shuffler and Lazzara, 2015).
It is recommended for Winch-It Company to create different performance indicators and performance management criteria for the overseas business. It will help them to manage it effectively. They should expand their business to new markets but they should make significant changes in their operations according to the need of business environment.
Conclusion
It can be concluded form the above that Winch-It Company should expand their business overseas. It will give them more opportunities to improve their business as well as customer base. They should use Global Functional Structure in their international business. Furthermore, they should use cross-cultural management to understand the values, attitude, behavior and preferences of the people. They have to made relevant changes in their services and products so as to meet the expectations of the customers. A centralized HRM system will help them to manage their human resource efficiently. Furthermore, international staffing method will help the company to become a global corporation. All the HRM policies and procedures should be localized to meet the requirements of overseas business.
References
Abdullah, L. and Zulkifli, N., 2015. Integration of fuzzy AHP and interval type-2 fuzzy DEMATEL: An application to human resource management. Expert Systems with Applications. 42(9). pp.4397-4409
Beadles, I.I., Aston, N. and Johns, K., 2015. The impact of human resource information systems: An exploratory study in the public sector. Communications of the IIMA. 5(4). p.6.
Huang, X., & Zhu, Y. 2016. Cross-Cultural Management and HRM. In Managing Chinese Outward Foreign Direct Investment (pp. 122-139). Palgrave Macmillan UK.
Importance of HRM. 2016. [Online]. Available through: <https://www.humanresourceexcellence.com/importance-of-human-resource-management/> [Accessed on 23th April 2017].
Jabbour, C.J.C. and de Sousa Jabbour, A.B.L., 2016. Green human resource management and green supply chain management: Linking two emerging agendas. Journal of Cleaner Production.112. pp.1824-1833.
Latorre, F. and et.al, 2016. High commitment HR practices, the employment relationship and job performance: A test of a mediation model. European Management Journal. 34(4). 328-337.
Mathis, R.L., Jackson, J.H. and Meglich, P., 2016. Human resource management. Nelson Education.
Salas, E., Shuffler, M.L. and Lazzara, E.H., 2015. Understanding and improving teamwork in organizations: a scientifically based practical guide. Human Resource Management.54(4). pp.599-622.
Shields, J., Dolle-Samuel, C. and Plimmer, G., 2015.Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.
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