The Changing Role of Strategic Human Resources Management in International Businesses

The business world is changing, and so is the role of human resources, especially on a global level. HRM was previously a support function in an organization, but today, it is becoming a strategic partner helping brands achieve their goals at all levels. Regarding the strategic role of human resources, its responsibilities go beyond administrative tasks. For instance, instead of processing payrolls monthly, HR managers need to take a deep dive into how their employees contribute to their success.

Strategic human resource management requires all executives and managers to be involved in the decision-making process, giving the company a competitive edge. In his book “Strategic Human Resources Management: Where Do We Go from Here?” he says that organizations that value their employees generate more profit than those that don’t. A recent study in 2019 also showed that successful organizations make sure their employees feel engaged, acknowledged, and well-trained. Organizations must introduce information sharing and self-managing into their organizational culture in today’s competitive business world.

Today’s HR department plays a strategic role in the business world. It can create high-performing work systems and introduce practices that create an environment of accountability and greater involvement.

The critical role of the strategic Human Resource department

Studies show that creating an international workforce is more challenging than securing capital or buying new technology. How your company manages its HR can be the deciding factor for your organization’s success or failure. All in all, effective management of HR can help you outperform your competitors and identify new and better opportunities. It can also help your organization adapt to global fluctuations in the market, effectively coordinate with subsidiaries (if any), share information throughout the firm, and successfully make cross-border acquisitions.

Many organizations and multinational corporations face the most significant challenge face coordinating with different teams worldwide and keeping control of overall operations. Research shows that when handling multiple entities in other parts of the world, a balance must be between organizational culture and individual values. Achieving a balance of such a magnitude becomes more difficult as the workforce becomes more diverse.

Imagine a scenario where the parent culture differs dramatically from the culture of its subsidiary in a different part of the world. In a situation like this, it may be more challenging for the parent company to exchange information, share technology and bring innovation between foreign outposts and home offices. Another significant challenge here is the difficulty in promoting the required organizational changes and managing any conflicts between the workforce in different parts of the world.

How can IHRM help streamline Organizational processes?

Fortunately, the IHRM strategies can help overcome the problems multinational corporations are facing today. For example, IHRM professionals can make sure that their top executives are familiar with different cultural norms within the workforce and worldwide.

An HR manager can advise managers and executives on how they can function across boundaries and develop cross-cultural interactions with employees for effective communication. It can teach these skills through various seminars, webinars, and training programs that involve overseas exposure.

These are just general suggestions, of course, and it can use many other HR practices to streamline organizational operations and bring coherence to the workforce. Organizations nowadays need to develop an international HR policy that clearly defines the HR values and broadly outlines its roles all over the company. After considering several internal and external factors, the HR manager and the department must select practices best suited for achieving organizational goals.

For MNCs, it is challenging to develop a compensation system that is sensitive enough to address cultural differences in the team and yet treats all employees everywhere. Studies have shown that local HRM practices are significantly impacted by the organizational culture in many ways – from how employees are brought on and fired and how they get promotions to the next level.

Conclusion

All in all, selecting the proper IHRM practice for your organization can pay off incredibly. As more MNCs opt for mergers and acquisitions, acknowledging different cultures and their norms is a crucial part of the job.