Critically evaluate the extent to which international

human resource management is converging.

Human resource management (HRM) is universal in terms of strategies, policies and

processes. The term has gradually replaced personnel management. Managing and
developing human resources in the international (global) setting is increasingly recognized
as a central challenge, particularly to multinational enterprises (MNEs). Human resource
management is both academic theory and a business practice that addresses the theoretical
and practice techniques of managing a workforce. While the theoretical aspects of the
discipline may also be universal, the same cannot be said of its practice. The paper defines
human resource management, the theoretical basis of the discipline, business practice and
global or international human resource management. Thereafter, the paper concentrates on
global perspective or issues in international human resource management practice.

Human resource management is the strategic and coherent approach to the management
of an organization’s most valued assets – the people working there who individually and
collectively contribute to the achievement of the objectives of the business. The terms
“human resource management” (HRM) and “human resources” (HR) have largely replaced
the term “personnel management” as a description of the processes involved in managing
people in organizations.

Human resource management can also be defined as the function within an organization
that focuses on recruitment of, management of, and providing direction for the people who
work in the organization. As a change agent, it is concerned with the nature of and
regulation of the employment relationship at the level of the workplace and broader
society.

The human resource management model emphasises.

• The need to search for new ways of working

• The central role of managing in promoting change

• The treatment of workers as individuals rather than part of a collective workforce

• The encouragement of workers to consider management as ‘partners’ rather than as
opponents – ‘us and us’, rather than ‘us and them’.

Global or international human resource management is the process of employing,

developing and rewarding people in international or global organizations. It involves the
world-wide management of people, not just the management of expatriates. An
international organization or firm is one in which operations take place in subsidiaries
overseas, which rely on the business expertise or manufacturing capacity of the parent
company. Such companies or organizations bring with them their own management
attitudes and business styles. Human resource managers of such organizations cannot
afford to ignore the international influences on their work.

International human resource management involves a number of issues not present when
the activities of the firm or organization are confined to one country. The issues in global
HRM include:

• The variety of international organizational models that exist

• The extent to which HRM policy and practice should vary in different countries. (This
is also known as the issue of Convergence and Divergence).

• The problem of managing people in different cultures and environments

• The approaches used to select, deploy, develop and reward expatriates who could
be nationals of the parent company or ‘third-country nationals’ (TCNs) – nationals of
countries other than the parent company who work abroad in subsidiaries of that
organization.

Bartlett and Ghoshal (1993) have identified 4 models

1. Decentralized federation in which each national unit is managed as a separate entity

that seeks to optimize its performance in the local environment. (This is the traditional
multinational corporation).
2. Coordinated federation in which the centre develops sophisticated management
systems enabling it to maintain overall control, although scope is given to local management
to adopt practices that recognize local market conditions.

3. Centralized hub in which the focus is on the global market rather than on local
markets. Such organizations are truly global rather than multinational.

4. Transnational in which the corporation develops multi-dimensional strategic

capacities directed towards competing globally but also allows local responsiveness to
market requirements.

CONVERGENCE AND DIVERGENCE

Another issue facing international organizations is the extent to which their human resource
(HR) practices should either ‘converge’ worldwide to be basically the same in each location,
or ‘diverge’ to be differentiated in response to local requirements. There is a natural
tendency for managerial traditions in the parent company to shape to the nature of key
decisions, but there are strong arguments for giving as much local autonomy as possible in
order to ensure that local requirements are sufficiently taken into account. (This is known as
global/local dilemma). Convergence may be increasing as a result of the following factors:

 The power of markets

 The importance of cost
 Quality and productivity pressures
 The development of like-minded international cadres
 The widespread practice of benchmarking ‘best practice’.

The contextualist paradigm is associated with the concept of convergence, which is defined
as the adaptation of priorities and patterns of management practices across countries as a
result of increasing global competition (Festing, 2012; Pudelko & Harzing, 2007). The
theoretical approaches offered to explain the idea of convergence are the market-driven
perspective and the neo-institutionalist perspective. The market-driven perspective
emphasizes the need to find the most effective and most efficient solution in today’s global
and highly competitive market, often referring to US-based benchmarks (e.g. Huselid, 1995;
Tichy, 1982), whereas the neo-institutionalist perspective assumes a global diffusion of US-
shaped practices caused by the dominant role of the USA in the global economy (e.g.
DiMaggio & Powell, 1991; Smith & Meiksins, 1995).