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Research Article Volume 2012 (2012), Article ID sjbm-219, Issue 3, 4 Pages, doi: 10.7237/sjbm/219

Impact of Globalization on Human Resource Management

Oyeyemi Kayode

Department of Educational Management

Lagos State University
Accepted 3rd March, 2012 Corresponding Author Email: [email protected]

Management is moving away from traditional personnel,

ABSTRACT- The pace of globalization is increasing continuously in administration, and transactional roles, which are
terms of markets for goods and services, investment and business increasingly outsourced. HRM is now expected to add value
opportunities within one or more organizations. This transformation
caused by globalization affects all the department in an organization in
to the strategic utilization of employees and that employee
which human resource management is not left out in this transformation programs impact the business in measurable ways through
crusade as it has obligation to move along with the changing demands of globalization, therefore Human Resources department are
the globalization process. This paper examines the impact of the workforce transforming as the modern business faces numerous and
on Human Resource Management either locally or internationally also it
revealed the various factors driving globalization in the workforce and the
complex challenges, and exploit opportunities. The
issues and challenges that confront the Human Resource Management in transformation of human resources today is a direct call of
the global markets, and also the benefits of globalization Human Resource the rapid changes within business due to factors such as
Information System (HRIS) to the Human Resource (HR) department. globalization. In the global competition within the flat and
connected new world, decision making in organizations has
Keywords: Globalization, Investment, Human Resource Management, become increasingly intricate and convoluted. The new
Business, and Human Resources Information System
global world has widened the talent pool for excellent and
marginal workers, and for permanent and fluid workers.
INTRODUCTION An organization's talent can be a source for a sustained
competitive advantage and can affect important
According to Arthur (1994) see globalization in the tendency
organizational outcomes such as survival, profitability,
of businesses, technologies or philosophies to spread
customer satisfaction level, and employee performance.
throughout the world, or the process of making this happen.
Human resources need to take advantage of technology and
Otokiti (2004) globalization implies the opinion of local and
data analytics to build a global human resource information
nationalistic perspectives to a broader outlook of an
system that collects and stores data from various sources.
interconnected and interdependent world with free transfer
The system will help to analyze the data to provide business
of capital frontiers. However, it does not include unhindered
insights, predict future needs and develop strategies to fill
movement of labour and, as suggested by some economists,
those needs. Companies with the ability to foresee and
may hurt smaller or fragile economies if applied
sustainably manage their workforce needs - especially for
indiscriminately. Greengard (1995) defined globalization as
high skills - will gain the decisive competitive advantage
the system of interaction among the countries of the world
(Aina, 2005). The global supply of talent is short of its
in order to develop the global economy. Globalization refers
long-term demand and the gap is a challenge for employers
to the integration of economics and societies all over the
everywhere. The shortage between the demand and supply
world. Globalization involves technological, economic,
of talent is likely to continue to increase, notably for highly-
political and cultural exchanges made possible largely by
skilled workers and for the next generation of multi-national
advances in communication, transportation, and
organization. Most organization with large workers Nigeria
infrastructure. Armstrong (2004) defined Human Resource
Breweries Plc may not be able to sustain a net surplus
Management (HRM) as the function within an organization
workforce with the right skills for much longer. Now, more
that focuses on recruitment of management of, and
than ever, organizations need to place greater emphasis on
providing direction for the people who work in the
attracting human capital rather than financial capital.
organization. Also, Human Resources Management is the
Because capital is broadly available from investors and
organizational function that deals with issues related to
lenders, and innovations can be duplicated relatively easily
people such as compensation, hiring, performance
and quickly, effective human resource management is the
management, organization development, safety, wellness,
best way to differentiate one company from another. Global
benefits, employee motivation, communication,
staffing and global leadership development are the two
administration and training. Onasanya (2005) Human
components of global human resources with the greatest
Resource Management is also a strategic and comprehensive
potential for powerful leverage for global firms. Only the
approach to managing people and the workplace culture
multinationals that will be willing to adapt their human
and environment. Effective HRM enables employees to
resource practices to the changing global labour market
contribute effectively and productively to the overall
conditions will be able to attract, develop and retain the
company direction and the accomplishment of the
right talent, and will likely succeed in the global competition
organization's goals and objectives. Human Resource
(Griffin, 2002).

How to Cite this Article: Oyeyemi Kayode, “ Impact of Globalization on Human Resource Management,” Science Journal of Business Management, Volume 2012
(2012), Article ID sjbm-219, Issue 3, 4 Pages, doi: 10.7237/sjbm/219
Page 2 Science Journals Publication(ISSN:2276-6286)

Factors Driving Globalization

The last two decades have seen the evolution of the global manufacturing environment, majority of the manufacturers have global presence
through exports, strategic alliances, joint ventures or as a part of a committed strategy to sell and produce in foreign markets (Greengard,
2005).

Global Market Forces

Global Cost Forces Globalization Technological forces

Process

Political and
Macroeconomic Forces

Fig 1: Conceptual Framework: The four driving forces of the Globalization Process. Adapted from global
operators and logistics: (Philippe-Pure et. al, 2005).

(a) Global Market forces (c) Global Cost Forces

There is tremendous growth potential in the global markets which New competitive priorities in manufacturing industries, that is
resulted in intensified foreign competition in local markets which product and process conformance quality, delivery reliability and
forces the small-and-medium-sized companies to upgrade their speed, customization and responsiveness to customers, have
operations and even consider expanding internationally. There has forced companies to reprioritize the cost factors that drive their
also been growth in demand which necessitates the development global operations strategies. The Total Quality Management (TQM)
of a global network of manufacturing bases and markets when the revolution brought with it a focus on total quality costs, rather than
markets are global, the production - planning task of the manager just direct labour cost companies realized that early activities such
becomes difficult on one hand and allows more efficient utilization as product design and worker training substantially impact
of resources on the others. production costs. They began to emphasize prevention rather than
inspection. In addition, they quantified the cost of poor design, low
(b) Technological Forces input quality and poor workmanship by calculating internal and
external failure costs. All these realizations placed access to skilled
A peculiar trend which was prevalent in the last decade, besides workers and quality suppliers high on the priority list for firms
globalization, was a limited number of producers which emerged competing on quality. Similarly, Just-in-Time (JIT) manufacturing
due to diversity among products and uniformity across national methods, which companies widely adopted for the management
markets. Product diversity has increased as products have grown of mass production systems, emphasized the importance of
more complex and differentiated and product life cycles have frequent deliveries by nearly supplies. A number of high-
shortened. These have been diffusion of technological knowledge technology industries have experienced dramatic growth in the
and global low-cost manufacturing locations have emerged. In capital intensity of production facilities.
response to this diffusion of technological capability, multinational
firms need to improve their ability to tap multiple sources of (d) Political and Macroeconomic Forces
technology located in various countries. They also must be able to
absorb quickly and commercialize effectively, new technologies Getting hit with unexpected or unreasonable currency
that, in many, cases, were invented outside the firm thus devaluations in the foreign countries in which they operate is a
overcoming the destructive and pervasive 'not - invented-here nightmare for global operations managers. Managing exposure to
attitude and resulting inertia. changes in normal and real exchange rates is a task which the

How to Cite this Article: Oyeyemi Kayode, “ Impact of Globalization on Human Resource Management,” Science Journal of Business Management, Volume 2012
(2012), Article ID sjbm-219, Issue 3, 4 Pages, doi: 10.7237/sjbm/219
Science Journals Publication(ISSN:2276-6286) Page 3

global operations manager must master. If the economics are has to look for opportunities to move different processes around
favourable, the firm may even go so far as to establish a supplier the Globe.
in a foreign country where one does not yet exist. For example, if
the local currency is chronically undervalued, it is to the firm's Benefits of Global Human Resources Information System to
advantage to shift most of its sourcing to local vendors. the Human Resource Management

Human Resource Management issues and challenges in Global A global Human Resource Information System can put vast amount
Market Human Resource Management of multinational employee data to strategic use. Ideally, the global
database is automatically updated by the local databases ensuring
(HRM) challenges to business especially those operating across data is not only inputted correctly, but only once. By applying
the national boundaries as multinational or global enterprise consistent standards for data management, global HRIS reporting
competing in global markets entails many factors and becomes more accurate and streamlined as all of the decision
centralization of its human resource practices is certainly vital to makers receive and have access to the same information. This
improve global competitiveness and empower employees for information can then be used for in-depth analyzes to help HR and
global assignment. To achieve success in global market place, the the organization make better, more informed decisions (Kane,
challenge of all businesses regardless of their size is to understand 2001). By applying a consistent process for capturing and
global corporate cultural differences and invest in human maintaining employee specific data (job, position and
resources. There are certain. Vernon (2004) human resource qualifications), the global HRIS can be used to identity, plan and
management issues that are particular for the global enterprise. budget for employee training, succession planning and expatriate
The key issues involve staffing policies selecting and retaining assignments. As the "war on talent" continues to loom, a
talented employee, training and development whilst encouraging multinational organization with a global HRIS can very quickly
employees to be innovative and creative, culture barriers, and legal and easily discover the right person to fill a specific position.
frame work. Others issues include understanding the challenges Having the ability to locate the best qualified employee regardless
of living and working conditions, performance appraisals from a of his/her location is a competitive advantage. Additionally,
distance, training and management development, compensation designing the system to identify with employees are interested in
packages and labour relations and organized labour laws. overseas assignments will also make the expensive and time-
consuming expatriate process quicker and easier (Miller, 2004).
Roles and Responsibilities of Human Resource Using the Human Resource Information System (HRIS) to think
locally, but compensate globally - compensation can be applied
Human resource is a department which leads the development and fairly across the globe while still being aware of and understanding
upgrade of the corporate culture. The common corporate culture differences in compensation for similar jobs in various countries.
is crucial for the global organization. The organization cannot act Compensation users are able to review plans in local and additional
the same way around the globe when the corporate culture is currencies and languages. A global HRIS can also provide
different. On the other hand, the development of the common compensation guidelines and help documentation either on or
corporate culture is difficult. The nations are different. The HR role off-line to assist employees in understanding their compensation
is to set up the international team, which develops the unified package and to assist the manager with award decisions and
corporate culture and corporate values. The role of Human policies (Vernon, 2006). From the view of Greengard (2005)
Resources is setting the essential training courses for managers. incorporating a global HRIS provides each manager with the
HR has to push managers to apply for the courses. They have to capability to toggle a compensation model from the direct reports
understand roots of the common corporate culture and how they screen and complete planning for each of their direct or indirect
are expected to behave globally. The employees and managers have reports. The HRIS is then able to immediately show the impact on
to communicate globally with colleagues around the Globe. The local and global budgets and expenditures. From a qualitative
unified way of communication, the approach to problem solving perspective, the organization is able to quickly assess current
and identification with the organization make global decisions employee availability and their qualifications for staffing the new
easier (CIPD , 2006). Human Resources should be the first global department or project regardless of the employee's location.
function. It has to introduce the globally managed, HR processes Overall, planning becomes more accurate and decisions become
focused on the development of the global talents and bringing the more transparent (Vernon, 2006). But, the benefits of a global
unified approach. The performance management and the talent Human Resource Information System (HRIS) go beyond the ability
management are usually the first globally managed HR processes. to analyze and use employee data. The system encourages
The unified and globally managed performance management geographically diverse operations to share ideas and innovations
process helps to manage the performance of individual businesses (Miller, 2004). It can also create an element of cultural cohesion
in countries and helps to identify the future global leaders for the and closeness for employees - especially those within the
organization. The global Human Resources is able to identify best expatriate community (Insight consulting partners, 2004).
talents in the organization, and more talents of different countries. Employees across the organization regardless of location, will feel
It is not easy to introduce the global mobility, but the global more connected to each other and will have a single point of
organization needs global managers, who are able to run different contact.
projects over continents. The identification of global leaders needs
a strong global Human Resources. The HR professionals have to Conclusion
be trained in global policies, and they have to be managed from
different centers of excellence around the Globe. The globalization The increasing prevalence of globalization is driven by a number
demands new skills and competencies. Managers have to think of factors, including shortage of talent in developing countries,
globally, and they have to find advantages for the organization on global market forces, technological forces, global cost forces. Also,
the global basis. They have to be able to negotiate with partners this paper examines the various issues in Human Resources
from different cultural background. Human Resources has to adopt Management and challenges in the global market also this paper
its processes, procedures, policies and training to ease the life of look into the roles and responsibilities of Human Resources in this
managers into the global world of the organization. The role of globalization era, and finally examines the benefits of global HIRS
Human Resources is to help the organization to become the real to the growth and development of HRM in an organization.
global organization. Human resources has to identify leaders, it

How to Cite this Article: Oyeyemi Kayode, “ Impact of Globalization on Human Resource Management,” Science Journal of Business Management, Volume 2012
(2012), Article ID sjbm-219, Issue 3, 4 Pages, doi: 10.7237/sjbm/219
Page 4 Science Journals Publication(ISSN:2276-6286)

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How to Cite this Article: Oyeyemi Kayode, “ Impact of Globalization on Human Resource Management,” Science Journal of Business Management, Volume 2012
(2012), Article ID sjbm-219, Issue 3, 4 Pages, doi: 10.7237/sjbm/219