Business is becoming a unified global arena as trade barriers fall, communication becomes faster and cheaper and consumer tastes in everything from clothing to cellular phones converge. Firms from across the globe are entering new markets, facing new challenges head on and forming global alliances with other firms — to compete more effectively and succeed. Globalisation demands that managers stay abreast of economic, social and political trends around the world, and understand the implications of these trends for their organisations.
Firms operating in international markets face different conditions and competitions. Multinationals are characterised by an interdependence of resources and responsibilities across all business units regardless of national boundaries. These companies have to cope with large flows of components, products, resources, people and information among their subsidiaries, while simultaneously recognising the specialised resources and capabilities of each. This demands a complex process of coordination and cooperation involving strong cross-unit integrating devices, a strong corporate identity and a well developed worldwide management perspective.
People play a key role in any type of business activity but their role has become very critical in the new economy and service sector. Multinationals have emanated mostly from developed economies, which now controls about 50% of world trade and 75% of global GDP and dominate the service sector (60 to 80%). Therefore, how multinationals manage their human resources, e.g. acquire, allocate, utilise and reward, becomes an important field of study and analysis. [ Global Human Resource Management ]
Among the various factors that need to be addressed by a company for managing global HRM system are:
1. Building a global culture, which will encourage the managerial mindsets and attitudes to develop an integrated, networked organisation to cope with global customers and global transactions.
2. Developing the leadership and managerial capability and structure to support global strategies and operations.
3. Gaining management interest and involvement in human resource management.
4. Ensuring managers have the technical and managerial skills to work effectively at the global level.
5. Increasing the extent and scope of managerial talent in the organisation.
6. Developing global and local approaches to training and development.
7. Sustaining and improving performance at all levels in all areas of the company.
8. Linking HRM to strategic objectives. [ Global Human Resource Management ]