By Arshad Husain

Abstract

Globalization symbolizes the structural making of the world characterized bythe free flow of technology and human resources across national boundariespresenting an ever-changing and competitive business environment. A vitalaspect of globalization is the way diverse challenges are being faced bynations in an increasingly inter dependent world. No country can meaningfullyprogress today without efficiently responding to demands and pressuresgenerated by international organizations and processes. World TradeOrganization (WTO) for instance is bound to lead in a whole new system oftrading relations. This paper is an attempt to address two limitations. Firstthe human factor is the key in the new era of globalization, a primaryobjective of this paper is to present a conceptual framework for effectivemanagement of human resources as a response to the growing interaction ofglobalization and business performance. That in order to manage employees forcompetitive edge in a period of globalization. And the second limitation ofpaper will focus on how training is important for fulfilling strategic goalsand especially during times of technological growth and development in themodern world of ever changing information and innovation in order to meet thechallenges of globalization.

INTRODUCTION

As we enter a new millennium, the effects of internationalization now knownas globalization are everywhere apparent. This has played a major role insustaining the economic expansion of the global economy in the second half ofthe 20thcentury. Globalization is seemingly shrinking the planet as barriers totrade are dismantled, transport and communications costs fall, and globalproduction systems are formed and managed by giant multinationalcorporations.

Globalization can be defined as the ongoing economic, technological, social,and political integration of the world that began after the Second World War.There are several dimensions to this dynamic process, including the increasedinternationalization of economic markets as reflected, for example, in tradeand financial capital flows. The primary objective of this paper is to presenta conceptual framework for strategic management of human resources as aresponse to the growing interaction of globalization and business performance.The rapid integration of the world economy through increased trade andinvestment, which has been fueled by new technologies, the spread ofinformation and the growing importance of knowledge-based industries, providesthe potential for opening up new avenues for human development.

Three central arguments made in this article are:

1. That a great deal of evidence has accrued to suggest that changes takingplace in the global business environment often are not accompanied bycomplementary changes in human resource management practices leading to asituation whereby the failure of some firms is due to the mismanagement ofpeople rather than to problems with technical systems.

2.This is because organizations have achieved relatively low levels ofeffectiveness in implementing Strategic Human Resource Managementpractices.

3.That in order to manage employees for competitive edge in a period ofglobalization, human resource personnel must possess competencies relevant foreffective implementation of such strategic HRM policies and training.

HRM ISSUES AND CHALLENGES IN GLOBAL MARKETS

The coming of the 21 century poses distinctive HRM challenges to businessespecially those operating across national boundaries as multinational orglobal enterprise. Competing in global markets entail many factors andcentralization of its human resource practices is certainly vital to improveglobal competitiveness and empower employees for global assignments. To achievesuccess in global marketplace, the challenge of all businesses regardless oftheir size is to understand global corporate cultural differences and invest inhuman resources. There are certain human resource management issues that areparticular for the global enterprise. The key issues involve staffing policiesselecting and retaining talented employee, training and development whilstencouraging employees to be innovative and creative, culture barriers, andlegal frame work. Others issues include understanding the challenges of livingand working overseas, performance  appraisals from a  distance, training  and management development, compensation packages, andlabor relations and organized labor laws.

STRATEGIC HRM AS A RESPONSE TO THE CHALLENGES OFGLOBALIZATION

The world has undergone a dramatic change over the last few decades, theforces of globalization; technological changes have greatly changed thebusiness environment. Organizations were required to respond in a strategicmanner to the changes taking place in order to survive and progress. StrategicHuman Resource Management (SHRM) involves a set of internally consistentpolicies and practices designed and implemented to ensure that a firm’s humancapital contribute to the achievement of its business objectives. Strategichuman resources management is largely about integration and adaptation. Itsconcern is to ensure that:

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1. Human Resources (HR) management is fully integrated with the strategy andthe strategic needs of the firm.

2. HR policies cohere both across policy areas and across hierarchies.

3. HR practices are adjusted, accepted, and used by line managers andemployees as part of their everyday work. SHRM practices are macro-oriented,proactive and long term focused in nature; views human resources as assets orinvestments not expenses; implementation of SHRM practices bears linkage toorganizational performance; and focusing on the alignment of human resourceswith firm strategy as a means of gaining competitive advantage.

The role of people in the implementation of strategic responses has asignificant bearing on the success rate. It is therefore imperative fororganization to look at the human issues involved before implementation of anystrategic responses. At this connection the question is: How can organizationseffectively adopt, implement and maximize HRM practices for valued firm leveloutcomes? That is, how can firms increase the probability that they will adoptand then effectively implement appropriate HRM practices? Insuring that membersof the HRM personnel have the appropriate human capital or competencies hasbeen suggested as one way to increase the likelihood of effectiveimplementation of HRM practices .The future HR professional will need fourbasic competencies to become partners in the strategic management process.These include business competence, professional and technical knowledge,integration competence and ability to manage change.

IMPLICATIONS FOR HRM PRACTICES

HR professional competence describes the state-of-the-artHR knowledge, expertise and skill relevant for performing excellently within atraditional HR functional department such as recruitment and selection,training, compensation, etc. This competence insures that technical HRknowledge is both present and used within a firm.

Business-related competence refers to the amount ofbusiness experience HR personnel have had outside the functional HR specialty.These capabilities should facilitate the selection and implementation of HRMpolicies and practices that fit the unique characteristics of a firm includingits size, strategy, structure, and culture .In other words, these competencieswill enable the HR staff to know the company’s business and understand itseconomic and financial capabilities necessary for making logical decisions thatsupport the company’s strategic plan based on the most accurate informationpossible.

FRAMEWORK AND PROPOSITIONS

The human resource function faces many challenges during the globalizationprocess, including creating global mind-set within the HR group, creatingpractices that will be consistently applied in different locations/officeswhile also maintaining the various local cultures and practices, andcommunicating consistent corporate culture across the entire organization. Tomeet these challenges, organizations need to consider the HR function not asjust an administrative service but as a strategic business.

The following is derived from the framework as mentioned above:

1. Human resource managers may have achieved higher levels of HRprofessional  competencies and lower levels of business relatedcompetencies.

 2. The incidence of implementing strategic HR practices is lower inorganizations especially in the developing countries.

 3. Both HR professional competence and knowledge of the business(business related competence) significantly contribute to the extent ofimplementing SHRM Practices.

 4. Managerial competencies are significantly related to organizationalperformance.

 5. The extent of implementing SHRM practices contribute significantlyto firm level outcomes.

 6. The relationship between SHRM and organizational performance isaffected by organizational context variables (firm size, level of technologyand union coverage).

It may be pertinent to point out here that the six propositions derived fromthe framework are particularly relevant for giving insights into the HRMchallenges facing organizations in the new era globalization. In other words,these propositions will help us organize thought on the level of readiness (andotherwise) of organizations in response to the challenges of the globalbusiness environment. For example, if HR personnel especially in developingcountries demonstrates higher levels of HR professional competence relative tothe business-related competence (as found in the literature), it would beimportant to set right this wrong as a stepping stone for succeeding in globalbusiness. This is because to succeed in the new era of globalization, the humanfactor is central. That is why it is necessary for HR personnel to provethemselves beyond reasonable doubt that they are capable of playing key rolesin enhancing the status of the HR department (Barney & Wright) must possessa thorough understanding of busines and also act as important influences in thelevel of integration between HR management and organizational strategy (Golden& Ramanujam).

TRAINING FOR GLOBAL BUSINESS

Firms competing in a global market place, and organizations are to surviveand prosper in the modern world of rapid change, they need to be more flexible,faster-moving and faster-learning than before. For that firms are implementingspecial global training programs, the reason for doing to avoid lost businessdue to cultural insensitivity, improving job satisfaction and retention ofoverseas staff and enabling a newly assigned employee to communicate withcolleagues abroad. Providing training for employees not only helps them developtheir skills and knowledge, but it is also motivational and a building block toorganisational success. Global training programs opt for prepackaged programs.(Gary Dessler).

 • Executive Etiquette for Global Transactions: Thisprogram prepares managers for conducting business globally by training them inbusiness etiquette in other cultures.

 • Cross Cultural Technology Transfer: This programshows how cultural values affect perceptions of technology and technicallearning.

 • International Protocol and Presentation: Thisprogram shows the correct way to handle people with tact and diplomacy incountries around the world.

 • Language Training: Language training delivered bycertified instructors, usually determined by the learner’s needs.

CONCLUSIONS

This article summarizes the interaction of globalization and businessperformance especially with a flavor of the challenges from the perspectives ofhuman resources. This article presents a framework for Strategic HumanResource Management as a response to prepare organizations for the challengesof globalization. It has been observed that by and large organizations haveachieved relatively low levels of effectiveness in implementing Strategic HumanResource Management (SHRM) practices (Huselid, et al.). The rampant pace ofglobal competition, the speeds of technological developments, rapidly changingdemographics, and the incredible increase in information technology haveresulted in a business environment that changes day to day, hour to hour. Toremain competitive in such a dynamic environment, businesses must continuallyimprove their human resource management systems and organizational changes. Ifthe propositions outlined above are supported, then the real challenge fororganizations in the era of globalization is to pay particular emphasis tostrengthening their human resources by upgrading the relevant competencies.Addressing these issues is a necessary step towards facing the challenges ofglobalization in to the next millennium.

REFERENCES

Golden, K.A. & Ramanujam,. Between a dream and a nightmare: On theintegration of human resource management and strategic business planning.

Gary Dessler, Ninth Edition Human Resource Management.

Srinivas R.Kandula, Strategic Human Resource Development

Sims, R.S. & Sims, S. J Changes and Challenges for the Human

Resource Professional. Personnel Psychology

Schuler, R. S. 1992. Strategic Human Resource Management: Linking peoplewith the needs of the business. Organizational Dynamics,

Huselid, M. A. & Becker, B. E.. Methodological issues in cross-sectionaland panel estimates of the human resource-firm performancelink. Industrial Relations

Delery, J. E & Doty, D. H. Modes of theorizing in strategic humanresource management: Tests of universalistic, contingency and configurationalperformance predictions. Academy of Management Journal,Phillips, N. Innovative management. London: Pitman.

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