Globalization is the integration of the world due to the explosion of international trade and technologies that make communication easier. Therefore, the world has become a global village in terms of values and even cultural preferences. Globalization has implication on HR practice because companies can hire global talent and use the newest technologies to manage talent. The biggest opportunity that the trend presents to HR managers is the chance to adopt global practices in human resource management and recruiting global talent but at the same time, a more diverse workplace is harder to manage.
Trends in the Business Environment and Their Impact on Human Resource Development (HRD)
New digital technologies that have made communication easier have contributed significantly to the integration of the world and subsequent globalization. Those technologies include web 2.0 that gave rise to Facebook, Gmail, Twitter, or social media in general. Moreover, international trade itself has been growing, and therefore technology has only accelerated a trend that had already started. Globalization refers to the tendency where domestic companies expand their operations and go international. It also describes the growing interdependence world’s economy, technology, people, information, and investment (Christiansen, 2013). Technology and international trade are responsible for globalization and the shift towards a more integrated and interdependent world economy has implication for human resources due to factors such as diversity of employees, and managing employees across various cultures among others.
The roots of globalization started immediately after the Second World War. The relative peace in most parts of the world, including Germany and Japan, created an incentive to focus on trade and development. Moreover, the allies established most of the global institutions that fostered economic integration such as the predecessor to the WTO and UN that offered a legitimate platform for policing world peace. The sustained peace further led to inventions and innovations especially in the 90s in various fields such as the personal computer, the internet, World Wide Web, broadband internet, among others. More recently, the invention of the smartphone had delivered computing devices to billions of people across the world.
In terms of human resource management, globalization has had a massive impact. One of the impacts is on the area of recruitment. Traditionally, companies relied on newspaper ads, preference for internal hiring, use of banners to announce vacancy, and telephonic interviews (Ja’Far, Santoso, Oktavianingrum & Yulindasari, 2019). However, in the modern global world supported by technology, recruitment has moved away from those traditional methods. Companies rely on ads posted online and interviews are sometimes online via teleconferencing tools. Human resource managers rely on internet sites such as LinkedIn to shortlist candidates before the actual interviews. Such platforms allow employees to display their skills and even share projects they have done in the past on GitHub in the case of software engineers. Employers are also interested in the social media activities of their employees to determine their personality, interests, and general temperament. Such tools did not exist a few decades ago.
HR practice has also evolved in key areas in response to the opportunities and challenges presented by globalization. Consequently, while traditional HR was administrative in focus, modern HR is strategic. Hiring employees is part of the strategic orientation of companies to position themselves in the market and gain a competitive edge over rivals. Thus, HR managers are proactive, always looking for the kind of employees who can bring a difference using their skills and experience. Traditional HR function was reactive and only hired in response to outside factors such as an employee quitting (Khan, 2017). As mentioned earlier, the HR function is a strategic activity of the modern firm and therefore, the HR department is a key part of the organizational mission. It does not operate as a separate or isolated from the mission and the strategic goals of the organization.
Other emerging HR practices include service focus, investing in people, and hiring HR specialists with broad skills. The service focus is in response to the need to deal with people coming from various backgrounds and dealing mostly in the service industry. Under globalization, most companies have a focus on selling and offering service to their customers with production serving a small part of their operations and that explains the service focus. Also, companies view employees as investments and not as expenses.
Other trending concepts under globalization include specialized application, reducing manual efforts, use of information technology, diversity in the workforce, and work-life balance. HR managers have to consider diversity in the workplace because global companies have employees from different companies. Without diversity training and inclusion, relations can quickly deteriorate. Work and life balance is also an emerging concept as employees try to foster emotional stability and reduce stress. Moreover, the younger generation including generation X is prone to stress and depression and work and life balance is crucial to promote mental health and maintain productivity. In addition, the use of information technology is a critical aspect of human resource management especially recruitment and employee training and development.
International human resource management has to include cultural training, language training, and practical training. The training is critical to prepare employees to deal with fellow employees in cross-cultural environments as part of intercultural communication. Intercultural communication refers to the mastery of communication across cultures under different cultural backgrounds. It involves learning various cultures, communication styles, and cultural orientation under models such as Hofstede’s cultural dimensions theory. However, the most important consideration is employee retention.
Opportunities and Challenges Globalization Present for HRD Professionals
Globalization presents opportunities for HR professionals to adopt best practices in the management of employees. Some of the practices include employee training and development, which is critical in the improvement of the quality of employees. There is a growing realization that employees are the most important resources for any company. Therefore, the emerging global practices demand continuous employee training and development to impart new skills and improve employee productivity. For employees, those practices promote their welfare and therefore globalization is making employees well off. Another global best practice is the use of innovative remuneration and job enrichment a practice pioneered by American technology companies.
Remuneration is an important aspect of employee motivation and traditionally, remuneration took the form of the payments only. However, in recent years, HR managers have experimented with new remuneration methods such as offering free food, transport, and childcare, and the result indicates such approaches, in addition to good remuneration, motivates employees to work harder and longer. Globalization offers opportunities to try those new approaches including job enrichment strategies such as allowing employees to pursue personal programs to boost their motivation (Hunter & Katz, 2012). The integration of the world makes it easier for managers to identify new practices and try them in their workplaces. Moreover, by adopting good practices, it makes organizations more competitive in the labor market.
Globalization is also making HR managers recruit the best talent regardless of nationality. In the technology sector, getting global talent is critical, and it underlies the success of American technology companies. Companies able to attract and retain global talent stand a better chance in the market where competition is stiff. Therefore, global companies seeking to invest in the best talent are not restricted by nationality. Despite the opportunities globalization presents to HR, it also brings challenges. Perhaps the biggest challenge is managing employees from different cultures. Companies have to invest in training HR managers to improve their capacity for recruiting and integrating employees from different cultural backgrounds (Marquardt & Berger, 2003). The process is hard as predicted by Hofstede’s cultural dimensions theory. Also, globalization increases diversity which also demands diversity training to create a conducive work environment. Most companies might lack the resources to invest in training and handle the challenges that come with managing diverse employees.
Recommendations for HR professionals
The first recommendation is that companies should approach the HR function as a strategic function. It is essential to integrate organizational strategies with those of HR function so that recruitment aligns with the organizational objectives. However, due to the challenges of managing diversity, companies need to include intercultural communication, diversity, open communication, and intercultural understanding and communication in the training and development programs of the company (Narula & Dunning, 2010). Such approaches make it easier for companies to take advantage of global talent, which multinationals require to manage their operations in various countries around the world. Another recommendation is to stick to professional ethics to avoid exploiting labor especially when companies take production to onshore locations to take advantage of cheaper labor in emerging markets.
In summary, globalization is a trend that is changing the nature of human resource practice. New technologies make it easier for HR managers to recruit and manage talent. However, at the same time, they have to contend with the challenge of managing a diverse workforce. The solution lies in investing in promoting the capacity of HR managers to manage diversity through training.