Application Of International Management In Retailing Business
The retail internationalization is not a continuously fruitful process where organizations can implement key strategy models and expect meeting their objectives successfully. In contradiction, it is an incoherent procedure with times of growth and achievements, where some periods can be stable and not that successful. An unmistakable comprehension of what is the noteworthiness of the internationalized retail offer and the special national and universal administration aptitudes that the organization has would appear to be crucial. How these permits or limit the internationalizing retailer in the production of a special and uncommon task to what as of now exists in the objective commercial centre stays vital for both operationalizing and understanding effective retail internationalization. The above analysis will focus on a critical evaluation of the international management application of managing a global workforce in an international context.
Globalization and HRM
Human resource management (HRM), can be defined as the process of managing and developing employees in an organization. HRM includes the supervision of every function that is linked to managing a company’s human capital. Therefore, it is responsible to direct multiple key functions such as; rewards and benefits, training and learning, labour and employee relations, organization development and most importantly recruiting and staffing. According to Sparrow and Braun (2008), International human resource management (IHRM) can be defined as the methods and techniques that the HRM function implement to support the procedure of internationalization in multinational organizations.
The world has been shaped from various alterations of economy, culture, society and politics which have been generated through globalization. Through the years, there was a significant aggregation of technological innovations, of products, services and capital transportation to even the lowering of national borders (Guttal, 2007). Thus, the implications of globalization, shaped the strategies and expansion models of business and most important to the retail industry where the competitive advantage is crucial. Any company that wants to develop and grow has essential requirements to expand its activities globally.
IHRM Approaches and Critical Evaluation
According to Boxall (1992), International Human Resource Management (IHRM) focuses on the human resource issues that multinational organizations may come across in foreign subsidiaries. Alternative it may concentrate to the potential human resource management problems that are linked to multiple stages of the internationalization process (Wall, et al., 2010).
There are three approaches to IHRM to analyze any issues that may come up through internationalization. First the cross-cultural approach, which advocates that the way that each society and economy operates is influenced by the specific individual characteristics such as the deep-rooted values and beliefs that every nation owns. The cross-cultural approach though, tend to analyze human behaviour in business from an international angle. Boxall (1995), suggested that the comparative HRM aim to analyze the ways that employees work and studied the diversity between countries in their approach to the HRM and in general attempted to characterize, contrast and study HRM practices in multiple nations. Finally, the international HRM attempts to analyze the effects of the internationalization practices of HRM procedures and policies.
There are various current arguments in the IHRM literature who emphasizing in the importance of context. More precisely, there is the opposition of adopting a universalist versus a contextual paradigm. With its roots in the strategic HRM literature, the universalist paradigm advocates that there is one ‘’best way’’ in operating the HRM functions which will create absolute organizational efficiency. Hence, it advocates that organizations who adopt the ‘’best practice’’ will successfully meet their objectives.
The argument between the cross-national convergence or divergence management practices is closely linked to the research for ‘’best practice’’ in comparative management research. Due to globalization, technological developments and organizations with global operations are promoting the transfer of standardized HRM practices across borders. However, there are some advocators who identify that the adoption of ‘’best practices’’ form some nations cannot be successful due to the institutional and cultural aspects of societies which are deep-lying in the way that organizations are operating (Farndalea, et al., 2017). In addition, Hofstede (1980), and his study about the cultural dimensions, identified the disadvantages of adopting a universalistic model of IHRM which advocates ‘’one best way’’. However, there are some advocators who argue about the emphasis that have been linked on national culture in international management in disadvantage of organizational differences. Nevertheless, the focus on the country origin is a continuous topic that should be highlighted.
Retailing is a major labor-intensive industry sector. Therefore, companies are continually challenged to re-organize and adapt their structures to become more efficient. The necessity for part-time workers, because of long store opening hours and peaks in the trading day/week, requires a flexible framework to optimize labor processes. Emotionally, the workforce needs orientation and vision in changing times. Human resource management (HRM) has to provide a “coach,” not only to organize, but also to support employees and management mentally and professionally in fulfilling their tasks in terms of future company goals. People are the driving force behind all transactions that occur in retailing outlets. In the future world of retailing, there will be an increasing need to adapt and change towards a more formative and proactive style of HRM. Retail internationalization processes
Successful retailers have identified that it is pivotal to adjust in the local needs even though they may operate in a global context. The different ways of internalization in the retail industry and the HRM approach are the main factors that design the organizations international strategy. According to Perlmutter (1979), they are four different attitudes to internalization; ethnocentric, polycentric, regiocentric and geocentric.
When companies adopt the Ethnocentric approach, the strategic decisions are made in the headquarters as long as key positions in both home and host country are occupied from headquarters management employees. For the application of the above approach the home country HR needs to find and send capable employees from the parent country to the host country. Those are called expatriates.
The application of the Polycentric approach allows the home organization to provide each plant at the host country with some level of decision-making autonomy. The parent company also acknowledge each subsidiary as a special individual national unit. Subsidiaries are usually managed and staffed by local, host-country nationals who are promoted to positions at headquarters. Also, employees from the parent country are not usually transferred to the various subsidiaries. The application of the polycentric approach in the retail industry, benefits the organizations from experiencing various cultural aspects and in accordance to value creation is less costly. Further, it contributes to career promotions for local employees but there are limitations to the positions that can achieve since managerial and corporate positions are not available. However, it cannot be underlined the potential knowledge and performance gaps that could be provoked between the managers from the home and host countries (Chitakornkijsil, 2010).
Organizations who adopt the Geocentric approach, employ people from different nations, cultures or background as long as they are best suited for the job. The main idea is the creation of a worldwide integrated business where nationality does not consider to be a barrier and capabilities are the key aspect. Thus, employees can work either at the home or host country at any professional level. The adaptation of the geocentric policy in the retail industry can generate value from the quest for experience and from the multi-directional transfer of core competencies as well as location economies.
Finally, in the Regiocentric approach, companies employ the ‘’best people’’ from the region that each subsidiary is located. Employees can work in different countries that their origins, but they can only be located in a specific geographical region. However, regional managers potentially would not be able to get promotions in positions to the headquarters, but they can they are able to make decisions and own an adequate level of regional autonomy.
Addressing the IHRM Issue of Sending Expatriates Though IHRM
Addressing one of the biggest IHRM issues; sending expatriates, from the IHRM lens drives the internationalization process to the ethnocentric approach. Since the other three internationalization processes which have been discussed above and are more flexible about staffing and thus more successful, the ethnocentric approach and specifically the expatriate’s assignment have been strictly criticized (Black & Gregersen, 1999). In the ethnocentric approach, sending expatriates can be very challenging for the HR department. The design, the implementation and the completion of the assignment requires time and money. According to a Harvard survey, expatriate assignments most of the time are failing; and even if they run successfully the repatriation is the most challenged part. More precisely a percentage of near twenty of American mangers who engaged in an international assignment return before the completion of their task due to job dissatisfaction or cultural shock. Further, even those who manage to finish their assignment did not perform as expected and one-fourth left the company to join competitors in one year after their return.
To address the problems of international assignments, HRM specialists will need to work on: planning, selection, preparation, adjustment, rewards, performance measurement and repatriation. First, the right people need to be sent for the right reasons (Black & Gregersen, 1999). According to James P. Johnson, Ph.D., professor of international business at Rollins College Crummer, many multinational organizations are failing to recognize and identify necessary traits when sending employees abroad such as resourcefulness and a high tolerance for ambiguity which are vital features for expatriates and cannot be taught in the training period before the departure. Thus, the HR department should focus on identifying vital personality and psychology features in the potential expats. Organizations should take a holistic -approach to pre-departure preparations for expatriates. Aspects such as: the language, the culture in the new country, individual and family support before, during and after the assignment, a strong connection between the expatriate and the home-country and even a mentor in the host-country such as a local who is a distinguished organizational leader or even a former experiences expatriate. Addressing the failure rates in repatriation, any company that wishes to participate in universal business in a successful and profitable way, should introduce and assure the rewards and expectations that employees will enjoy after the completion of the assignment. Potentially, successful foreign assignments are those who can be the ‘’stepping stone’’ for employees to be promoted in senior positions instead of finishing the task and face the uncertainty of their professional future (Zehnder, 1991). There are three practices that assist in the success of international assignments. First, the organization needs to focus on knowledge creation and in growth of global leading skills, second it is vital to choose employees who own cross-cultural skills aligned with their technical capabilities and third it is pivotal to assist in the repatriation process. Further, it is very important for organizations to understand that by employ local people who are familiar with the language, culture and the business customs is a key to success for subsidiaries. That could be the rationale for the negative implementation of the ethnocentric approach the last years which is not the best for a global marketplace.
Conclusions and Future Trends
Retail is an intensive industry. Hence, organizations who are willing to be successful and effective have to constantly re-organize and adapt their structures. Human resource management should act like a ‘’coach’’ not only to organize but in addition to assist employees mentally and professionally in the completion of their assignments in linkage of future company objectives. The future of retail will be shaped form the need to adapt and change towards a more formative and proactive style of HRM. According to Paul Sparrow, a professor at Lancaster University, in the HRM future more emphasis will be placed on local responsiveness. Specifically, he advocates that there will be more political pressure on HR managers to prove that their organization engages in more localization and transfer skills and operations to host nation operations. Thus, in the future HRM approaches and practices will have to focus on location and take advantage of the local resources and capabilities by respecting and adapting the host culture.
