The strategic international human resource management Essay Example for Free

The strategic international human resource management Essay In order to explore the role of strategic international Human Resource management in making multi-national organisations competitive, this assignment reflects the strategic international human resource management issues that the branch of the Vietnamese Pha Lai glass company has to face through human resource process: (Polycentric approach). Some introduction about Pha Lai glass manufactory Some introduction about Laos and PEST analysis Issues relating to Human resource process in Laos: + Forecasting labour demand and supply + Recruitment + Selection and placement + Training + Appraisal performance + Remuneration and benefit + Compensation + Occupational health and safety Issues relating to Vietnam expatriate managers : + Cross-culture suitability (Geert Hofstede (1984) in cross culture study) + Family requirement + Language + Host environment in Laos Some best examples for other Vietnamese organisations have success in operations in Vientiane, the capital of Laos. Introduction: In the new background, as Vietnam became an official member of international organisations such as Asean, Apec, Afta and along with the integration trend of Vietnamese economy into the Asean economy and the world economy, the business environment will be opened up with a lot of new factors, more opportunities accompany by more challenges. Therefore, competition becomes fiercer and fiercer. This situation requires Vietnamese enterprises have to a more long-term prospect as well as more effectiveness about their development. Engaging in international operations is one of the most suitable strategies that many Vietnamese organisations choose for their existence and development. The Pha Lai Glass company is one of the typical examples for that. The company has successful performed in the domestic market over the past five years, and now it is in the early stages of a feasibility study for expanding its manufacturing capacity, and as part of the strategic plan is considering establishing a plant in a foreign country, Laos, which is the neighbour country of Vietnam. The branch will be located in Vientiane, the capital of Laos. Some introduction about the Pha Lai Glass factory Pha Lai glass factory, one of Vietnamese famous manufactory, is in the early stages of a feasibility study for expanding its manufacturing capacity in a foreign country after success over the past five years. The factory is located on Pha Lai Town, Chi Linh District, Hai Hung province in Vietnam. The products of the manufactory include glass products. The initial capital is 6753 million Vietnam dongs; total revenue now is 9758 million Vietnam dongs. The total manufactorys labour is 587 people. Some introduction about Laos Lao is bordered to the north by the Peoples Republic of China (505 kilometers), to the south by Cambodia (435 kilometers), to the east by Vietnam (2,069 kilometers), to the northwest by Myanmar (236 kilometers), and to the west by Thailand (1,835 kilometers). Laos has a total area of 236,800 square kilometres, stretching a distance of approximately 1,000 kilometers form north to south. The Lao political system is run as a peoples democracy with the Lao Peoples Revolutionary Party at its head. The nations political policy can be simply stated as a democratic government empowered by the people to work for the people. The total population of the country is approximately 6 million people. Of the total number, 2965300 are male and 3034700 female. (Source: http://www.business-in-laos.com/laos.htm) PEST analysis An analysis of the new environment is important because it increases in the quality of the operation of the manufactorys branch in Laos by considering a range of relevant features well before making a suitable strategic decision. It is necessary to identify the threats that the branch have to face as well as the opportunities it can be get in the Laos invest environment by applying PEST analysis. Political/legal The Laos Government allows a great deal of flexibility, particularly welcomes foreign investors who wish to operate business in Laos. Laos is perfectly prepared for every type of investment, it is ready for development and, by its membership of ASEAN in July 1997, and it intends to participate with other countries in the development of the region to keep pace with the changing world. The branchs property and investments in Laos shall be protected by the laws and regulations of the Lao PDR. Such property and investment may not be requisitioned, confiscated or nationalized except for a public purpose and upon payment of prompt, adequate and effective compensation. Economic The countrys trading policy has varied from to period according to economic policy. Trade occurred with other socialist countries, that is, Viet Nam, Cambodia and the Soviet Union. Public enterprises began to play a role in foreign trade. With the advent of the policy of New Thinking, the nations economic development has steadily been liberalized and is moving towards a market economy. Due to the natural expansion of the economy, Lao achieved a high growth rate. Laos opened its doors to foreign investors, total investments from both the local and foreign investors was nearly US$ 8 million for total 636 projects. Socio-cultural Population and labour force According to Laoss statistics, the population of Laos is nearly 6 million in which the labour force represents 48% (approximately 2800000 people) of the total population of the country. That is considerable labour force for the development of the branchs human resource. The employment rate was slightly higher for male than for female, 52% and 48% respectively. The labour force is aged 10 years and above. It is an important issue that the branch must to be interest first because that is too young labour force. Health Life expectancy rate is appreciated about 51 years. Education and Literacy About 72% of men and 53% of women have access to education in Laos. Educational quantity has been increased. This advantage will lead the branch have a suitable human resource plan. Technological Economic development in Laos is aimed mainly at the development of its infrastructure. Another focus is on such unique opportunities as being an electricity-exporting centre for neighboring country, particularly Thailand and Vietnam. Thus, technological applications to help in the development of the country current tend to learn towards those areas of knowledge and management rather than more varied and complicated machinery. (Source: http://www.business-in-laos.com/laos.htm) After fulfilling PEST analysis in order to assess the investment opportunities in Laos, it is recognized obviously that this is potential investment environment for Pha Lai glass factory expanding the branch in this fully potential neighbour country. The Functional Organisation for the manufacturing branch in Laos includes as follows: One President One Vice President of Production One Vice President of Marketing One Vice President of Human Resources One Vice President of Finance Polycentric approach for the organisation structure The Organisation structure for the branch in Laos is applied the polycentric approach. It means: The President is from the PCNs, Vietnam. The Vice President of Production and the Vice President of Finance are also from Vietnam in order to assure that operations are supervised under PCNs policy. The Vice President of Marketing and Human Resource are HCNs (Laoss) because they are local people in Laos so they understand deeply about politics, economy, socio-culture and technology environment in Laos, they will achieve their mission better. 585 Laos employees (99% of total labour force of the branch). A polycentric staffing policy is one in which HCNs are recruited to manage subsidiaries in their own country and PCNs occupy positions at corporate headquarters (Dowling, Welch and Schuler, 1999). The branch does not recruit from TCNs. As a role of the president of the branchs operations in Laos, the International Human resource management model will be applied by Ralobbins and Coulters model (2003), p 283. Part 1: Issues to Vietnamese expatriate managers in Laos Selecting Managers The advantages and Disadvantages of using Parent-country Nationals Advantages * Organizational control and coordination is maintained and facilitated * Promising managers are given international experience * Vietnamese managers may be the best people for the job because of special skills and experiences. * There is assurance that subsidiary will comply with company objectives, policies, and so on Disadvantages * The promotional opportunities of Laos staff are limited * Adaptation to Laos staff may take a long time * Vietnamese managers may impose an inappropriate HQ style * Compensation for Vietnamese and Laos managers may differ Cross-culture Suitability According to Geert Hofstede (1984) in cross cultural study, there are four kinds of culture as follows: Power distance (PD) is the extent to which an unequal distribution of power is accepted by members of a society. Uncertainty avoidance (UA) is how much members of a society are threatened by uncertain and ambiguous situations. Individualism collectivism (I) is the tendency to take care of oneself and ones family versus the tendency to work together for the collective good. Masculinity-femininity (M) is the extent to which highly assertive masculine values predominate (acquisition of money at the expense of others) versus showing sensitivity and concern for others welfare. (source: Geert Hofstede (1984) cross cultural study) The cultural environment in which Vietnamese managers operate is an important factor in determining successful performance. Laos has some features of the uncertainty-avoidance culture that will be convenient for Vietnamese managers in Laos. Because Laos has a good traditional culture for long-time ago, and up to now, it is still kept and developed more brilliantly. A good cultural environment will assist Vietnamese managers avoid the culture sock as well as stress at work. Family Requirements The contribution that the family, particular the spouse, makes to the success of the international assignment is now well-documented. However, there are other issues that the planners needs to concern due to a spouse or partners difficulties with adapting to life in Laos as well as covering all of the Vietnamese expatriate familys living cost. Language The ability to speak a second language is an aspect often linked with crosscultural ability (Dowling, Welch and Schuler, 1999). Language skills may be regarded as of critical importance for managerial positions. Tung (1986) suggested knowledge of the host-countrys language is an important aspect of expatriate performance, regardless of the level of position. Differences in language are recognised as a major barrier to effective crosscultural communication. Thus, Vietnamese expatriate managers must be good speaking Laoss language people in order to perform operations of the branch effectively. Host Environment The environment in Laos also has an impact on Vietnamese expatriatess operation capability. According to Gregresen et all, nd, the international context with its differing societal, legal, economic, technical, and physical demands can be a major determinant of expatriate performance. However, the environment in Laos is likely to have positive impact on Vietnamese expatriate because Laos and Vietnam have had a good relationship for long time ago as well as have a certain neighbourhood. Part 2: issues relate to Laos human resource staff. The Human resource management process includes following steps: Step 1: Human resource planning Step 2: Recruitment Step 3: Selection and placement (identification, selection, and placement of competent employees) Step 4: Training Step 5: Performance appraisal Step 6: Remuneration and benefits Step 7: Compensation Step 8: Occupational health and safety Human resource planning After PEST analysis in the new investment environment, the branch needs to have an appropriate Human resource planning. Human resource planning includes forecasts of labour demand, forecasts of labour supply, forecasts of labour surplus or shortage, goal setting and strategic planning. The main advantages of a polycentric policy identified above, are: + Employing Laoss staff eliminates language barriers, avoids the adjustment problems of Vietnamese managers and their families, and removes the need for expensive cultural awareness training programs. + Employment of Laos allows the branch to take a lower profile in sensitive political situations. + Employment of Laos is less expensive than that of Vietnam, even if a premium is paid to attract high-quality applicants. + Employing Laoss employees gives continuity to the management of the branchs operation in Laos. This approach avoids the turnover of key managers that, by its very nature, results from an ethnocentric approach. Forecasting, on both the supply and demand sides were used by judgemental method. Forecasts of labour demand: Total labour force in the Pha Lai glass company is 587. So the labour demand at Vientiane will be similar to 587 including one Vietnamese President, two Vietnamese vice presidents of Production and Finance; two local vice directors of Marketing and Humance Resource and 582 local human resource employees. Forecasts of labour supply: The labour force in Laos is about 2800000 people that the percentage of men and women are 52% and 48%, respectively. Particularly Laos has the young labour force from 10 and above. This is an abundant, strong labour supply force for the project. Determining labour surplus or shortage: According to two forecasts of labour demand and supply, the labour force is surplus and this issue is determined, the branch can determine the next issue for potential problems. Goal setting and strategic planning The second step in human resource planning is goal setting and strategic planning. The goal directly comes from the analysis of labour supply and demand The labour force can be appreciated satisfactorily for the current and future of the branchs operation targets. Recruitment Recruitment is a complex process, generally defined as searching for, and obtaining, potential job candidates in sufficient numbers and quality, and at the right cost, for the branch to select the most appropriate people to fills its jobs. The questions for recruitment process will be as follows: + How many people does the branch need? + Where can the branch recruit? + Who are sufficient for jobs? For these issues, the responses will be: According to determining labour demand, the branch needs 582 workers within sufficient skills, competence and knowledge for it targets and goals. * Methods for recruitment can be either internal methods such as posting skills, inventory or external methods such as radio, television, newspaper, trade journals, computerised services and so on. * Sources for recruitment can be external sources such as referrals, walk-ins, agencies, schools, CES, trade unions. Selection and placement Selection is the process of gathering legally defensible information about job applicants in order to determine who should be hired for long or short-term positions. Interviews and test are applied for selection process. This includes questions about the following: * Age, sex, religion and national origin * Number of children and who will care for them * Height and weight, unless job related * Marital status * Conviction record unless strongly related to job * Credit status * Relatives and friends working for the employer. At the end of selection, every potential candidate is identified and placed their appropriate positions. Training Only by examining the skills and competence for a job (as defined in manufacturing glass, for example), managers can identify training requirements and select the training programs that be based on job-related criteria (Holton and Bailey 1995; Hong and Lin 1995; Piskurich 1994). Required skills and competence will be transferred from Vietnamese major manufactory to Laoss staff in order to adapt business operation requirement in Laos. Performance appraisal Although Laos employees may learn about how well they are performing through informal means, such as co-workers telling them what a great job they are doing or their supervisors giving them an occasional pat on the back. Performance appraisal will be defined here as a formal, structured system of measuring, evaluating and influencing an employees job-related attributes, behaviours and outcomes to discover at what level she or he is going to perform in his or her job: That is, how productive he or she is and whether he or she can perform more effectively in the future. It is a dynamic and multidimensional process (Latham and Wexley 1981; Carroll and Schneier 1982). Remuneration and benefits Another important issue is to motivate employees and the way which is used to motivate employees to perform more effectively is based on distribution salaries and benefits. For the growth and development of the branch, Laos employees need to express satisfaction with their salary and benefits. Compensation All Laos employees in the branch must be covered by workers compensation insurance by compensation policies of the branch. The insurance provides a scale of benefits for employees who are injured at work or who incur a work-related illness. The aim of the legislation is to maintain employees income and employment benefits for the period that the employees is unable to perform his or her usual work Occupational health and safety One of important issue is occupational health and safety for labours force. If the branch can reduce the rates and severity of its occupational accidents, diseases, and work-related stress levels and improve the quality of work life for its employees, it can become more effective. Line directors must have a large responsibility in ensuring that program intervention is implemented, demonstrated to Laoss workers that occupational health and safety objectives are supported at all levels. Conclusion The ability to manage Human resources on an international basis is one of the first important issues that any manufactory must assess before expanding its operations abroad. With fully detailed analysis about the opportunities as well as the challenges that the branch will have to face in Laos, I, as a role of the Human resource manager in the factory, believe that applying International human resource management strategy above can help the branch of Pha Lai glass factory have many prospects for further sustainable development in Laos as well as in other countries in the future. Current examples of best practices suitable to the company There are many Vietnamese enterprise have operations successfully in Laos, some examples below are the most obviously detailed evidences that are realistic and feasible to illustrate. Dien Quang Lamp Company had already set up a distributorship and agency in Vientiane. Now it was looking to expand. Dien Quang products are exported to 18 countries all over the world, including in Asia and the Middle East. In 2002, we aimed at breaking into the Lao market and this year, we had an advertising plan to take our trade name to Lao consumers Mr Phan Ngoc Huy, Assistant General Director of Dien Quang Lamp Company said. Mr Dam Van Hong, from the Sales and Marketing Department of Saigon Plastic Company said the company was planning to build a factory in Laos. Our factory will be located at Km 7 and will be 4,000 sq m in Area. The Vietnam trade representative office in Laos said almost all the Vietnamese business that joined the That Luang Trade Fair on this occasion met their targets to penetrate the local market, to find partners to establish agencies or become distributors and to introduce high quality products to the Laos consumer. (Source: http://www.mot.gov.vn/Laowebsite/News.asp?id=65kind=1) References Books 1. Dowling Peter J, Welch Denice, Schuler Randall S, P 1999, International Human Resource Management Managing People in a Multinational Context, third edition. 2. Brewster Chris and Harris Hilary, P. 2000, International Human Resource Management Contemporary issues in Europe, second edition. 3. Kramar Robin, Mcgraw Peter and Schuler Randall, P. 1998, Human resource Management in Australia, third edition. 4. Sisson Keith and Storey Storey, P. 2001, The realities of Human resource Management Managing the Employment Relationship. 5. Geert Hofstede, P. 1984, Cross Cultural Study 116000 employees 40 countries. 6. Stoner James A.F, R. Edward Freeman, Gilbert Daniel R, Jr, P. 2000, Management, sixth edition. Webs 1. http://www.thuonghieuviet.com.vn/index 2. http://www.business-in-laos.com/laos.htm 3. http://www.hanover.park.org/Thailand/MoreAboutAisa/vninfo/companies/cty2451.html 4. http://www.mot.gov.vn/Laowebsite/News.asp?id=65kind=1 Bibliography Books 1. Dowling Peter J, Welch Denice E and Schuler Randall S, P. 1999, International Human Resource Management Management People in a Multinational Context, third edition. 2. Sisson Keith, Storey John, P. 2001, The realities of Human Resource Management Managing the Employment Relationship, second edition. 3. Brewster Chris and Harris Hilary, P. 2000, International Human Resource Management Contemporary issues in Europe. 4. Lewis Pamela S, Goodman Stephen H and Fandt Patricia M, P. 2001, Management: Challenges in the 21st century, third edition. 5. Kramar Robin, Graw Peter Mc and Schuler Randall S, P. 1998, Human Resource Management in Australia. 6. Robbins Stephen P and Coulter Mary, P. 2004, Management, eighth edition, Pearson, Prentice Hall. 7. Geert Hofstede, P. 1984, Cross Cultural Study 116000 employees 40 countries. 8. Stoner James A.F, R. Edward Freeman, Gilbert Daniel R, Jr, P. 2000, Management, sixth edition. Webs 1. http://www.handover.park.org/Thailand/MoreAboutAsia/vninfo/companies/cty2451.html 2. http://www.drc.com.vn/index.php 3. http://www.business-in-laos.com/laos.htm 4. http://www.thuonghieuviet.com.vn/index 5. http://www.bitis_vn.com/ 6. http://userwww.sfsu.edu/~jnichols/clas-618.htm 7. http://www.mot.gov.vn/Laowebsite/News.asp?id=65kind=1 8. http://www.ilir.uiuc.edu/courses/Non-current/lir490b/Lectures/6_IntroToCulture/Sld010.htm