Appropriateness of Standardization and Localization
The report throws light on the overall analysis of the different approaches of the standardization and localisation can have a massive impact on the actions of the managers in reference to the specific practices of HR. Proper discussion on the appropriateness of localization and standardization are required to be identified which can be adopted by the managers in the companies to improve the overall HR related practices effectively. Moreover, the reasons are expected to be stated that will help in identifying the difference in the HR practices in various countries. Lastly, the impact of the local or the organizational culture on motivation and empowerment of the employees is needed to be identified concerning the effectiveness of the organization. There are various approaches in HRM that are required to be followed as it will help in enhancing the overall process of improving the situations.
As commented by Adams, Nyuur, Ellis and Debrah (2017, p.192), the standardization in the context of human resource management is the global integration of the parent organization policies along with practices. It refers to the overall level of the central coordination by the HQ which will be helpful in closely integrating the different operations of the subsidiaries in the entire worldwide which will be beneficial in achieving the organizational goals successfully. For instance- There are various Japanese companies such as Toyota and Canon have followed traditionally the standardization approach that helped them in bringing overall efficiency in the different activities which are performed by them in comparison to the other competitors.
On the other hand, the multinational corporation of America IBM has tried to utilize the relatively standardized practices of the HRM for the different aspects such as recruitment and training of the various employees and candidates. Moreover, Shin and Konrad (2017, p.996), have commented that as per the institutional theory along with perspective, there are significant factors which affect the organizations to follow the standardization aspects which is inclusive of coercive isomorphism, mimetic isomorphism along with normative isomorphism. In addition to the same, as commented by Maharjan and Sekiguch (2016, p. 164), the coercive isomorphism of the MNC is the overall influence by the powerful constituency which is inclusive of the government norms which have been imposed by them in a certain pattern, and the organizations are required to follow such standards mandatorily.
However, on the contrary, Geary and Aguzzoli (2016, p.996), have opined that mimetic isomorphism is the other aspect wherein the different multinational companies are in such an uncertain situation, and they try to adopt the pattern which is exhibited by the company in their home country, and it is viewed to be successful in their operations as well. Lastly, Farndale, Brewster, Ligthart and Poutsma (2015, p.1085), have opined that the normative isomorphism is the situation wherein the different MNCs are affected by the various professional companies which act as the disseminators of the appropriate pattern of the organization in the respective environment.
Standardization
As commented by authors in Forbes.com (2019), the standardization is the global best practice which is accepted in the entire worldwide and it is treated as the rational approach and initiative which is taken by the management by the different MNEs which will be assisting in transferring the different HRM policies along with practices to the different international operations with the belief that the operations which are being undertaken under the respective approach will be successful and provide the best results. The various factors of the standardization of the IHRM practices are as follows:
- The organizations will eventually adopt the transnational corporate strategy
- The corresponding organizational structure
- will support it
- The shared worldwide corporate culture will reinforce it
On the other hand, as commented by Edwards, Sanchez-Mangas, Jalette, Lavelle and Minbaeva (2016, p.1000), the different previous research shows that the national culture along with the different institutional characteristics has limited the overall transfer of the practices related to HRM. The transfer of the different HRM related methods to the overseas subsidiaries is limited in approach, and it might force the different MNCs to localize the various techniques described to human resource management. As commented by the authors in Econtentmag.com (2019), the process of localization is the different practices as well as the various policies of the host countries that are locally differentiated in nature. In the other terms, it can be identified that the subsidiary acts and behaves in a local manner and they are different from the parent country as well.
For instance- The different European organizations such as Nestle and Philips are the major proponents of the localization. It can be identified that in order to survive in the local market of India, Nestle has adopted the localisation strategies which helped them in sustaining in the local market and it helped them in attracting the customers, and it increased their sales. On the other hand, Walmart and Canon suffer due to low performance in the other markets, as the main focus of the companies is to follow the parent country perspectives and due to the same, both the companies have faced severe low performance in the different countries.
From the above, it can be identified that the two opposing factors such as standardization and localization are the challenges to the HRM related practices in the operations of the MNCs. However, the different multinational companies which can strike the proper balance between the two concepts, they will be able to deliver appropriate and appropriate performance in the market appropriately without many difficulties.
Localization
As commented by Chung and Furusawa (2016, p.169), the application of standardization is one of the best approaches which can be adopted by the different organizations which have their presence in the entire worldwide. From the particular perspective, it can be identified that the initiative of following the standardization approach can be seen as the result of the four inter-related difference drivers which will be supporting the IHRM standardization aspects in the following manner:
- Firstly, the top managers of the organizations need to believe that the current HRM practices of the various MNCs are superior in all regards and all scenarios
- Secondly, the managers need to believe the fact that coherence between practices which are necessary for the organizational effectiveness which is the all or none approach that is required to be considered by the top managers
- Thirdly, the different managers need to be experienced in the internationalisation approach which will be helpful for them to work in any situation which will be beneficial for the overall success of the organization
On the other hand, there are different kinds of aspects in the localization that can adopted by the organizations which will be beneficial in adapting to the local culture of the various countries and attract more customers effectively.
- Firstly, the local managers that the local practices of HRM are possible and plausible and the imposed standardized practices related to MNC will not work in the respective environment
- Secondly, the ability of the local managers is required to be analyzed to control the overall access to the global labour market, and the channels of distribution along with expertise may effectively hinder the efforts of standardization.
- Both the local culture along with political-legal systems can make create few edits in the practices of the MNCs as per the local culture or policies effectively
|
Differences |
Standardization |
Localization |
|
Differences in Competency |
It is treated as the best practice globally |
It is treated as the contingent and local practice |
|
Differences in Consistency |
There is global consistency in the different HR related practices along with coherence |
There is differentiation in the political-legal system, and there is enormous coherence amongst the local regulations |
|
Differences in Power |
The MNCs receive distinct advantages in the international industry and market |
There is control of the domestic partner over the various resources such as market and distribution channel and labour and material |
|
Differences in Experience |
The MNCs can experience in the internalising operations, and the level of maturity is high |
There is the inclusion of national experience in negotiating with the different foreign partners |
The significant distinctions between the different practices related to HRM in various countries wherein the significant fact which lies are that the domestic HRM is mainly involved with the different employees within one national boundary (Peoplematters.in, 2019). However, on the other hand, the IHRM deals with more countries which are inclusive of the following:
- Parent country wherein the firm is originated along with headquartered
- Host country wherein the subsidiary is located
- Other countries from where the company may source the labour, materials and research and development related activities
For instance- Woolworths is situated and initially founded in Australia; however they have their presence in New Zealand and other 995 locations. From the example, it can be analyzed and identified that Woolworths need to follow the various IHRM activities in different countries wherein they have their presence to address the different HR related issues of employees belonging from multiple nationalities (Businessreport.com, 2019). Woolworths need to follow the policies related to recruitment, selection along with compensation packages which will suit in the respective country.
From the particular example of Woolworths, it can be identified that the International Human Resource Management practices are different from domestic HRM practices. The main reasons for the difference in HRM practices are as follows:
Firstly, in different countries, there can be cross-cultural aspects which are unusual in various countries, and it can create gaps. The Hofstede Model of the natural culture consists of six dimensions which can be different in various countries and therefore, the practices related to HR is required to be different (Hofstedeinsights.com, 2019). From Figure 1, it can be identified that there are numerous cultural aspects which are different in New Zealand and Australia and it can create a massive effect on the overall efficiency of the different HRM related practices. land
Moreover, the strategy related to recruitment of the candidates can be different in different countries as in one country, there can be the inclusion of equality between men and women, however in the other country, the men employees are preferred more. In such a scenario, the different practices related to HRM will be different, and in such a scenario, if the standardized HRM practices are followed, it will affect the overall situation in the subsidiaries.
Implementation of Standardization and Localization Approaches for Managers
Secondly, there can be different diversity issues in various countries that can create a massive impact on different HRM related practices. It can be seen that there can be the inclusion of performance-based pay in few countries; however it is a different approach in the other countries that can create differences in the HR related activities which are being followed. For instance- It can be analyzed that Woolworths in Australia prefers to provide the performance-based pay to the employees who are performing efficiently, however on the other hand, there can be different situation in New Zealand as the culture of the country does not prefer the performance-based pay as they feel it is not critical and introducing the same in New Zealand can affect the overall managerial process.
Lastly, there can be training and compliance issues between the two countries in which it can be seen that while operating in Australia, Woolworths supermarket can adopt a separate training method such as on-the-job training aspect which will be beneficial for the respective country (Adams, Nyuur, Ellis & Debrah, 2017, p.193). There can be differences in the leadership aspects that can affect the overall growth of the firm in different countries wherein they have their presence. However, in New Zealand, it can be seen that there can be an inclusion of the off-the-job training aspects that will be beneficial in improving the process.
From the above, it can be analyzed and identified that these are the major three aspects that affect the different human resource related practices in different countries. In such scenario, the localization approach can be adopted by the companies which have extended their operations in various other countries as it will be beneficial for adapting to the culture of the respective country and gain competitiveness in the respective environment.
Motivation is one of the critical components of the organizational culture, and the organizational culture plays a vital role in organizations regarding the analysis of the feelings of the employees while working in the companies. There are different ways through which the organisational or the local culture created a significant impact on the motivation and empowerment of the employees concerning the effectiveness of the organizations. As commented by Budhwar, Tung, Varma and Do (2017, p.111), the strong culture is one of the approaches that can be adopted by the companies and it will bring positive energy of the people as it helps the employees in performing with loyalty and performing tasks in a much more efficient manner.
Reasons for Differences in HR Practices in Different Countries
Moreover, there is clear and mutual interdependence between the organizational culture and employees. It is the situation wherein both parties create a significant impact on one another, and it helps them in achieving success. Such kind of relation helps in giving birth to the relationship to the motivation among employees and job satisfaction. The organizational culture is the vital essence which should be prompted to ensure motivation among employees as to achieve the organizational goals (Brewster, Chung & Sparrow, 2016). The training and development procedures vary substantially from one country to the other. In such a scenario, the companies need to adopt the different aspects which are familiar to employees in the respective country.
Proper sharing of positive feedback is the other aspect which can help improve the overall morale of the employees. There should be room to grow for the employees which will be useful for the organizations to be honest and respectful and it will help gain a competitive advantage in the market. With the localisation aspect, the culture creates a significant impact on motivating employees, and it will help improve organizational performance effectively.
Conclusion
Therefore, it can be concluded that standardization and localization play a significant role in different activities related to human resource management practices. Both the approaches play a vital role in various organisations; however, the opposing forces of the localization and standardization are the challenges for the HRM related practices as there are various processes which are being followed in different countries and it affects the HR activities as per the cross-cultural aspects. Moreover, it has been noticed that there are different kinds of reasons for differences in the HR related practices such as cultural, diversity and political elements that create massive impact on the HR activities and in order to strike proper balance between the standardization and localization approaches, the multinational corporations need to keep an appropriate check between the two as to deliver the best performance in comparison of the other competitors present in the market.
References
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Brewster, C., Chung, C., & Sparrow, P. (2016). Globalizing human resource management. Routledge.
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Chung, C., & Furusawa, M. (2016). 10 The HRM of Foreign MNCs Operating in Europe. International Human Resource Management: Contemporary HR Issues in Europe, 169.
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Forbes.com (2019) Why Leaders Need To Embrace Employee Motivation (online) Retrieved from https://www.forbes.com/sites/christinecomaford/2018/01/20/why-leaders-need-to-embrace-employee-motivation/ [Accessed on 24 Mar 2019]
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