ASIA PACIFIC INSTITUTE OF MANAGEMENT

HRM-

PROBLEM DUE TO GLOBALIZATION

Guided By: - Swati Tiwari Submitted By: -Abhay

Yadav

MBA (II-Sem)

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 CONTENTS: - Page No.

 Introduction of Globalization 03
 Globalization and Key aspects of it 04
 Globalization A Simple Fact Sheet 05
 Social and Economic Implications 05
 Effects of globalization 06
 Introduction of Human Resource Management 09
 Objective of HRM 10
 Globalization affecting HRM 12
 Factors that affect HRM 14
 HRM issues and challenges 15
 Problems Due to globalisation in HRM 16
 Conclusion 18

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 Preface

Globalization is basically concerned with

GLOBALIZATION

Introduction of Globalization: -

Globalization represents the structural making of the world characterized by the free flow
of technology and human resources across national boundaries as well as the spread of
Information Technology (IT) and mass media presenting an ever-changing and
competitive business environment.

There is no denying the fact that the world economy is becoming increasingly global in
character. Barriers to trade between different countries have been reduced to a great
extent. India, which is also a member of the World Trade Organization (WTO), has also
removed most of the barriers of trade, which has paved the way for free competition.

Many foreign multinational corporations have brought technology and capital into India
and are now competing among themselves and with the Indian firms. Several Indian
firms have opened their subsidiaries in foreign country and have also entered into alliance
with local companies in foreign countries.

Norms, values and beliefs differ sharply among cultures and these shape patterns of
work-related behavior of the workers to a great extent. They also affect the nature of
supervisory relationship, decision-making styles and processes, and organizational
configuration. Group and inter-group processes, responses to stress, and the nature of
political behavior also differ from culture to culture.

Thus, globalization has posed both challenges and opportunities for the managers. The
global manager must work to understand the local cultural and the behavioral forces that

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affect the workforce in order to manage the workers more effectively. Even if the global
manager is working in his own country, he might have to adapt his management style to
deal effectively with such workers. Similarly, One has to master the art if interacting with
bosses and peers belonging to different cultures.

Definition: -

“Globalization refers to the process of reducing barriers between countries and

encourages closer economic, social and political interaction” emphasizes cross border
flows of goods, money, etc.

End of geography, death of distance—focus on technologies of transport and

communication—focus on flows of goods, services, money; fax machines, mobility of
capital-global village--Castles, Robert Reich

More extreme- “Today’s economy is genuinely borderless. Information, capital and

innovation flow all over the world at top speed, enabled by technology and fueled by
consumers desire for access to best and least expensive products.

The dominant form of globalization means a historical transformation: in the economy, of

livelihoods, and modes of existence; in politics, a loss in the degree of control exercised
locally for some, however little to begin with such that the locus of power gradually shifts
in varying proportions above and below the territorial state; and in culture, a devaluation
of a collectivity’s achievements or perceptions of them. The structure may engender
resistance or accommodation.

Globalization and Key aspects of it: -

Goods, people, money has certainly moved around the globe on large scale for hundreds
of years if not more; capitalism has a much shorter history—foreign trade of goods grew

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quite high in early 20th century, also financial flows. Trade between countries has grown
far more rapidly than production since 1960’s; huge growth of direct investment,
business services, international finance and debt. So is movement of people within and
across borders more rapid; e.g., importance of remittances, tourism, global market place;
firms produce and assemble parts of whole in many nations, reorganization of labor
process, capitalism more dominant and widespread globally; increasing economic
integration. So capitalism but quantitative and qualitative changes: global capitalism,
other terms, corporate sponsored globalization; globalization, free trade.

Globalization A Simple Fact Sheet: -

The Good News The Bad News

Wider markets for trade;
Larger private capital inflows;
Better access to technology; and
The availability of a wider variety of
goods.
Reduction in sovereignty;
Increased competition leading to the closure of
some units;
The risk of being left behind; and
The payoffs are larger, but so are penalties for
policy inaction.

Social and Economic Implications: - Dislocation of people necessary; increased

consumer choice—lower prices; compared favorably to Import Substitution
Industrialization (ISI) protectionist model which collapsed. Flexible labor, anti-
union; Short run pain, long run gain as capital and technology inflows lead to higher
productivity and wages, increased GDP which trickles down, environment improves as
income goes up. Brings democracy

What is to be done and resistance: - Reduce trade and financial restrictions, cause of
problems, more transparency and liberalization; integrate more into economic circuits
and WTO, etc. It is positive, progress and inevitable.

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Effects of globalization: -

Globalization has various aspects which affect the world in several different ways such
as:

Industrial Financial Economic

Poloitical EFFECTS OF Cultural

GLOBALIZATION
Informational Social

Transportation Technical Legal/Ethical

Effects of globalization

• Industrial (alias trans nationalization) - Emergence of worldwide production

markets and broader access to a range of foreign products for consumers and
companies .
• Financial - Emergence of worldwide financial markets and better access to
external financing for corporate, national and subnational borrowers.
• Economic - Realization of a global common market, based on the freedom of
exchange of goods and capital.
• Political - Political globalization is the creation of a world government which
regulates the relationships among nations and guarantees the rights arising from
social and economic globalization. Politically, the United States has enjoyed a
position of power among the world powers; in part because of its strong and
wealthy economy. With the influence of Globalization and with the help of The
United States’ own economy, the People's Republic of China has experienced

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 some tremendous growth within the past decade. If China continues to grow at the
rate projected by the trends, then it is very likely that in the next twenty years,
there will be a major reallocation of power among the world leaders. China will
have enough wealth, industry, and technology to rival the United States for the
position of leading world power. The European Union, Russian Federation and
India are among the other already-established world powers which may have the
ability to influence future world politics.
• Informational - Increase in information flows between geographically remote
locations .
• Cultural - Growth of cross-cultural contacts; advent of new categories of
consciousness and identities such as Globalism - which embodies cultural
diffusion, the desire to consume and enjoy foreign products and ideas, adopt new
technology and practices, and participate in a "world culture"; loss of languages
(and corresponding loss of ideas), also see Transformation of culture
• Social - Increased circulation by people of all nations with fewer restrictions.
• Transportation - Fewer and fewer European cars on European roads each year
(the same can also be said about American cars on American roads) and the death
of distance through the incorporation of technology to decrease travel time.
• International cultural exchange
o Spreading of multiculturalism, and better individual access to cultural
diversity (e.g. through the export of Hollywood and Bollywood movies).
o Greater immigration, including illegal immigration.
o Spread of local consumer products (e.g. food) to other countries (often
adapted to their culture)
o World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa,
Origami, Idol series, YouTube, Orkut, Facebook, and MySpace.
o World-wide sporting events such as FIFA World Cup and the Olympic
Games.

• Technical

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 o Development of a global telecommunications infrastructure and greater
transborder data flow, using such technologies as the Internet,
communication satellites, submarine fiber optic cable, and wireless
telephones.
o Increase in the number of standards applied globally; e.g. copyright laws,
patents and world trade agreements.
• Legal/Ethical
o The push by many advocates for an international criminal court and
international justice movements.
o Crime importation and raising awareness of global crime-fighting efforts
and cooperation.

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 Human Resource Management

Introduction: -

Human Resource Management is a process of bringing people and organization together

so that the goals of each are met. It is the part of management process, which is
concerned, with the management of human resource is an organization. It tries to secure
the best from people by winning their wholehearted co-operation. In short, it may be
defined, as the art of procuring, developing and maintaining competent work force to
achieve the goals of an organization is an effective and efficient manner.

HRM is a management function that helps managers recruit, select, train and develop
members for an organization.

Definition: -

According to Flippo, “Human Resource Management is the planning, organizing,

directing and controlling of the procurement, development, compensation, integration,
maintenance and separation of human resources to the end that individual, organizational
and social objectives are accomplished.”

According to Invancevich & Gokhle, “Human Resource Management is concerned

with the most effective use of people to achieve organizational and individual goals.”

Objective of HRM: -

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The primary objective of HRM is to ensure the availability of a competent and willing
workforce to an organization. HRM objectives are as follows-

HRM OBJECTIVES

SOCIETAL ORGANISATIONAL FUNCTIONAL PERSONAL

1) Societal: -

To be ethically and socially responsible to the needs and challenges of the society while
minimizing the negative impact of such demands upon the organization. The failure of
organization to use their resources for the society’s benefits in ethical ways may lead to
restrictions. For example, the society may limit HR decisions through laws that enforce
reservations in hiring and laws that address discrimination, safety or other such areas of
societal concern.

2) Organizational: -

To recognize the role of HRM in bringing about organizational effectiveness. HRM is not
an end in itself. It is only a means to assist the organization with its primary objectives
Simply; the department exists to serve the rest of the organization.

3) Functional: -

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To maintain the department’s contribution at a level appropriate to the organization’s
needs. Resources are wasted when HRM is either more or less sophisticated to suit the
organization’s demands. The department’s level of service must be tailored to fit the
organization it serves.
4) Personal: -

To assist employees in achieving their personal goals, at least insofar as these goals
enhance the individual’s contribution to the organization. Personal objectives of
employees must be met if workers are to be maintained, retained and motivated.
Otherwise, employee performance and satisfaction may decline and employees may leave
the organization.

Some other objective that are contributing their role in HRM-

a) Help the organization to reach its Goals.
b) To Employ the Skills and Abilities of the workforce Efficiently.
c) To provide the Organization with Well-Trained and Well-Motivated
Employee.
d) To increase to the Fullest the Employee’s Job Satisfaction and Self-
Actualization.
e) To develop and maintain a quality of work life.
f) To Communicate HR policies to all Employees.

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 Globalization Affecting HRM

Do the geographical and the national boundaries limit a business in the world of the 21st
century? The answer is simply, NO. The term Globalization has invaded the mind of
every successful businessman and the concept of Global Village is a common issue in the
modern business world.

A firm or an organization expands its sales or production beyond the national boundaries,
then it is globalization, but it does not cover the real meaning of the term. Globalization
actually means more, much more than that; it is realizing that there is a big world out
there, geographically, that reaches far beyond our small community and that the world is
getting closer to us all the time. Globalization is the realization that, whether we like it or
not, this big world is becoming an ever increasing factor in our daily lives.

The concept of globalization today has invaded the globe and the national boundaries
have been virtually eliminated.

So what is the effect of this? Simple, the world today has become a small but a very
complex and dynamic neighborhood. Today we live in a global village and this means
that our activities have crossed the national boundaries to become global.

While general business considerations are essentially the same the world over, business
styles differ greatly from country to country. He may be well equipped, trained and ready
to face the situation, but he acts according to the challenges and the requirement of the
situation as it comes.

Globalization of business has increased the international competition rapidly. The

organizations of today have become increasingly heterogeneous due to globalization.
Some actually welcome change and the opportunities it presents, while others are
reluctant to give up familiar ways of doing things. The human resource or the workers are
proactive in finding out what skills and qualifications will be required to be an employee

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of demand in the coming situations. Thus globalization has increased the requirement of
skill among employees and managers drastically.

Thus we have no doubt that the roles of HRM have been affected largely by the
globalization.

To analyze whether HR is reactive or proactive in these issues first we should be able to

what do Proactive or reactive meant in these context. Human resources manager of today
must ensure that the appropriate mix of employees in terms of knowledge, skills and
cultural adaptability is available to handle the global assignments.

(1) Are they ready to face the challenges?

(2) How effective have the change in the role of HRM became in terms of result?
(3) Is HR reactive or proactive in the issues of globalization and the change in their
role and the working environment?

The answer to all these questions are not easy to find since they are different with every
unit of the human resource together. So is the case of producers or organizations of today,
most of the big firms have already become the multinational giants. This aspect of
globalization has also affected the HRM in the business world of today.

Globalization has resulted in drawing people of various backgrounds together in same

workplace and the change is happening very quickly. HR of today’s world is aware what
may be happening next and they were already prepared for the today’s situation
yesterday.

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A number of factors that affect HRM in global markets are identified: -

(1) Culture,

(2) Economic System,

(3) Political System – the legal framework, and

(4) Human capital.

Culture: - In the multinational phase, cultural sensitivity becomes slightly less important
outside the firm (with clients). While multiculturalism begins to become less important
outside the firm, it becomes more important inside of the company. Staff from different
parts of the world work together on a day-to-day basis. Unfortunately, assumptions are
made, often mistakenly, that, inside the organization, personnel from different countries
will have no problems understanding each other because they all belong to the same
organization. By this stage, attention to developing cross- cultural skills is needed for
working both inside and outside the organization.

Human Resources: Fewer expatriates are necessary as the participation of host nationals
increases. The person making decisions for foreign operations is no longer an expatriate
marketing expert, but rather a valued manager of a worldwide line of business. In this
phase, as the approach changes to multinational, the managers who are sent abroad tend
to be more senior and therefore more central to the company's core management.

One dimension is treated: Human capital (the skills, capabilities or competencies of the
workforce). This is in consonance with the believe that competency-based human
resource plans provide a source for gaining competitive advantage and for countries
profoundly affect a foreign country's desire to locate or enter that country’s market. This
partly explains why Japan and US locate and enter the local markets in South East Asia
and Mexico respectively.
In the case of developing countries, globalization poses distinct challenges to
governments, the private sector and organized labors. These challenges, which must be
addressed through a strategic approach to human resource management.

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HRM ISSUES AND CHALLENGES IN GLOBAL MARAKETS

The coming of the 21st century globalization poses distinctive HRM challenges to
businesses especially those operating across national boundaries as multinational or
global enterprises. Global business is characterized by the free flow of human and
financial resources especially in the developed economies of European Union (EU), the
North American Free Trade Agreement (NAFTA), other regional groupings such as the
Association of South East Asian Nations (ASEAN), the Economic Community of West
African States (ECOWAS), the Southern African Development Community, etc.

These developments are opening up new markets in a way that has never been seen
before. This accentuates the need to manage human resources effectively to gain
competitive advantage in the global market place. To achieve this, organizations require
an understanding of the factors that can determine the effectiveness of various HR
practices and approaches. This is because countries differ along a number of dimensions
that influence the attractiveness of Direct Foreign Investments in each country. These
differences determine the economic viability of building an operation in a foreign country
and they have a particularly strong impact on HRM in that operation.

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Problems Due to globalisation in HRM: -

Globalisation affects us all indirectly. Clarifying this aspect and the wide-ranging
significance of the topic is one of the aims of this basic course. As a part of this, a
rational evaluation of the opportunities and risks, which set themselves apart from the
current vilification or hymns of praise, play a core role.

"The dynamics of globalisation are driven by economic forces, but its most important
consequences can be seen in politics".

Catch phrases, which need to be queried and analysed, are also to be found in the debate
concerning the resulting problems of globalisation. The diagram presents a selection of
these catch phrases, which can be added to without problem, depending on the situation
and the main points of emphasis.
An important aspect when querying these catch phrases can be found in the dimensions
of globalisation, where the question is asked concerning which aspects of the various

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dimensions are a part of globalisation (intersections) and which are not. At the same time,
it is worth asking which partial aspects of the resulting problems referred to can be
ascribed to globalisation, and which other causes are decisive.

Hence, in the area of social politics perhaps, numerous different analyses exist which
question the strict chain of causes represented by 'globalisation > location competition >
social dumping', and attempt to clarify the extent to which the amount available to the
nation state in social politics is actually restricted by globalisation processes.

Here are some problem that are described as follows-

1) Erosion of Nation State: - Due to globalization people think if they go out of

country they will earn more due to this tendency HR is affected much because the
cream layer of employee keep eye on foreign companies and due to the non
avability of proper employee there’s an erosion in the quality of nation or we can
say erosion of nation state.
2) Gulf Between Rich & Poor: - Due to globalization the number of multinational
companies come in India because it has a very large market. The MNC’s also take
new technology due to this the rich becomes richer and poor becomes poorer.
3) Non-Controlled Multi: - Due to globalization a number of multinational
companies come in India & on the name of quality the multinational play their
role in India. There are number of non-controllable multinational in India due to
this Indian companies affected much because lack of proper and qualified
employee.
4) Environmental destruction: - Due to globalization the labour intensive
companies turned to capital intensive and use high technologies, and new efficient
machines which produce much at low cost but make much pollution of air and
water leads to environment destruction.

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Conclusion: -

The frequently quoted maxim that the nation states are too small for the large problems,
and too large for the small ones originates from a paper written by Daniel Bell in the 80s.
Global problems such as the greenhouse effect are just as difficult to solve within the
framework of the single state as local problems are in education.

The result: an erosion of the nation state. It does not disappear, or become superfluous,
as many commentaries suggest, but simply erodes. Additional levels to solving the
problem both above and below the level of the nation state are added to the picture. The
former fixed limitations of territory of state, state power and the nation state is becoming
more permeable. No more, but certainly no less lies at the foundation of the comment
concerning the 'erosion at the nation state', which is particularly far advanced in Europe
in the form of the EU. Here, the states have abdicated their central competencies up to
and including sovereignty of currency to a new, supranational organisation.

These phenomena are altogether nothing new - they have been in discussion since the 70s
under banner of interdependence - however, the processes have accelerated, and reached
new dimensions in quality and quantity. This is what is new in globalisation.

This also applies to the same extent to the other aspects referred to in the diagram.
Environmental destruction already existed prior to globalisation, just as unwarranted
distribution did. But these problems are becoming more serious due to globalisation.
Meantime become a considerable movement amongst globalisation critics is heavily
indicative of this. On the other hand, globalisation creates the framework for
encountering global problems at a suitable, namely global level.

Reducing social benefits in order to reduce payroll fringe costs to increase competitive
ability in global location competition is seen a pure necessity, above all by industry,
whereas the trade unions warn of the dangers of 'social dumping'.

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It remains undisputed that a worker in India earns less than in Europe, and that this will
remain so in the foreseeable future. This provides business with considerable potential for
threatening to migrate to 'low wage countries'. But this apparently clear correlation does
not stand up to more precise analysis. Decisions on locations are not made on the basis of
wage costs alone. Other factors, such as the standard of education, or market presence
also play a prominent role.

Globalisation does not mean that it is possible to manufacture products easily anywhere
in the world. However, globalisation can be used as an argument or the bottom line for
threatening migration.

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BIBLIOGRAPHY: -

Books: -
 Human Resource Management /Personal Management by
K.ASWATHAPPA,
 Organizational Behavior by L.M Prasad.

 Human Resource Management by C.B GUPTA.

Search Engine: -
 Google.co.in,
 Wikipedia.com,
 QuickMBA.com,
 Answers.com

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