Global HR Management in the 4IR

Introduction

Alongside increasing global mobility, global economic and demographic trends and the expanding workforce diversity, the transformational changes to business environments and skills brought about by the fourth industrial revolution have created a perfect storm for strategic human resource management (Caligiuri and Bonache 2016). When these factors are taken into combined account, the result is a constantly changing, complex, and challenging environment in which business organisations must compete to attract and retain competent talent (Stone and Deadrick 2015). Organisations operating in a global environment face a number of new challenges such as differences in culture and language of employees, and variations in political, social, and legal systems (Tarique et al. 2015). Multinational corporations (large companies operating in several countries) are confronted with a number of new questions such as how to create consistent HR practices in different locations, how to prepare managers to work with diverse employees, and how to develop coherent corporate culture among others. Under this background, the aim of this report is to explore the concept of human resource management in the global context when taking into account the management issues brought about by the fourth industrial revolution. The paper uses BMW as the case company.

1a: HRM issues likely to be raised in BMW

As a company that is rapidly expanding its production and distribution capacities, BMW will certainly be affected by the HRM issues that arise in global environments. These would include HR strategies, systems and practices in different geographic territories and different socio-cultural contexts (Caligiuri and Bonache 2016). In particular, the legal system of the host country and the cultural distance between the host country and employees’ country are some of the factors that are likely to affect BMW’s HR practices while operating in global environments. According to Boddy (2016), HR practices differ across nations and are aligned with national cultures; for example, nations that emphasis individualism are likely to use pay-for-performance pay systems. This means that BMW HR practices will have to reflect the cultures of various nations given the company hires employees from different countries and has production and assembly facilities in different countries. From a different perspective, Brewster et al. (2016) argue that employees’ cultural values influence the acceptance and effectiveness of HR practices. For example, individuals who value individualism prefer reward allocation systems based on proportionality or equity while individuals who value collectivism prefer equality-based allocation systems. As such, if BMW adopted a pay-for-performance system, it may motivate employees who are individualistic but fail to motivate employees who value collectivism. Given that employees’ cultural values differ in the global contexts, a significant HRM issue for BMW would be how to align its HR processes and practices with the cultural values of its employees. Another possible challenge for BMW is differences in the composition of the global population; some countries have higher number of older people while others have higher numbers of younger persons and these generations have different work values, attitudes and behaviours. For example, older employees emphasise hard work and achievement, value intrinsic rewards, and are loyal to the organisation while younger employees value extrinsic rewards, work-family balance, steady employment, leisure time and promotion opportunities (Caligiuri and Bonache 2016).Given these differences, BMW is likely to be faced with the complex challenge of aligning reward and compensation systems with the values of multiple generations.

1b: The image conveyed by BMW

BMW presents itself as an innovative and future-oriented company. In order to deliver this image, BMW employees need to have innovative work behaviour whereby they create, introduce, and apply new ideas and processes. For BMW to create and maintain innovative work behaviour in the entire workforce, HR practices are important as they define the required attitudes and behaviours while discouraging undesired behaviours. In particular, the compensation system, training and development, information sharing, and supportive supervision are the HR practices and are likely to promote the innovative work behaviour (Bos-Nehles and Veenendaal 2019) required to deliver BMW’s image. Employment security will also help in establishing employees’ psychological commitment to the organisation while motivating them to take risks (Boddy 2016).When employees feel that they are fairly compensated, offered training and development programmes, feel that information is shared with them, and feel that the supervisors are supporting them, they will repay the organisation with innovative work behaviours (Bos-Nehles and Veenendaal 2019).

1c: The effect of increased overseas production on BMW’s HRM policies

With increased overseas production, BMW will be required to have training and development programmes for HR managers and expatriates which will prepare them for overseas responsibilities. In addition, BMW will have to have a reward system that is transnational meaning that if favours the values of different employees across the world. For example, based in an individualistic country, the company is likely to favour individualist approaches to work and individualistic rewards but this will have to change upon expanding operations to countries that value collectivism. Therefore, BMW will have to develop new policies rather than transferring the headquarter HR practices to subsidiaries since it will not always be possible to send expatriates to subsidiaries. According to Boddy (2016), hybrid HRM practices are more effective for companies with international operations given that HRM policies are shaped by both dominance of the company and cultural effects of the host country. From this perspective, BMW should employ a polycentric approach in developing HRM policies to ensure it captures the values and cultures of the host countries. It would be best for BMW not to localise its HRM policies but rather adopt standardisation based on global best practice models and policies. This way, BMW will be able to maintain cultural cohesion and resist pressure to adapt to local cultures and norms, which would otherwise completely change HRM policies and their applicability in different countries (Boddy 2016).

1d: Performance related pay

One of the benefits of using performance-related pay is the ability to retain top talent. According to Gooderham et al. (2018), employee turnover is higher among both low and high performers and therefore individual pay-for-performance would help a company retain high performers. Performance-related pay is also an effective approach to motivating employees: when employees are rewarded for performance, they are motivated to have higher achievement (Soucat et al. 2017). However, performance-related pay is only effective in individualistic, low-uncertainty avoidance, and achievement-oriented cultures (Boddy 2016), which implies it is not the best fit for international companies such as BMW in that they also have employees who value collectivism. Therefore, performance-related pay is likely to fit better in setting where competition between employees is encourages but unfit in settings where cooperation is regarded important. In short, the transferability of performance-related pay is affected by cultural factors, which implies that BMW cannot adopt the performance-related pay approach in international expansion.

1e: An older workforce

With a higher proportion of older employees, BMW is likely to benefit with higher productivity given that older workforce has more work experience and social skills. On the other hand, Joseph (2014) notes that older employees show high performance on organisational behaviours thus are more likely to engage in discretionary behaviours to compensate for any losses in technical core performance. This implies that by having a higher proportion of older adults, BMW is likely to benefit with a large percentage of high performers. Further, older employees are more committed to the organisation and have low turnover rates as compared to younger cohorts (Moen et al. 2017). However, most of the older employees are reluctant to change (Vantilborgh et al. 2015) and motivation declines with age which means that older adults are less motivated (Ciutiene and Railaite 2015). Given the innovative nature of BMW, it would be challenging to have a higher proportion of employees since they are not open to change. In addition, the company has to invest in motivational strategies to keep these cohorts at par with the younger employees. According to Vantilborgh et al. (2017), older employees value intrinsic rewards and therefore the adopted reward system should have features that intrinsically motivate employees. Such would include training and development, appreciation, recognition, and promotion among others. The company will also have to invest in training and development to equip the older employees with technical skills required in completing their tasks.

Part B: Leading by Motivation

2a: McGregor’s Theory X and Theory Y

The basic assumptions of theory X according to Boddy (2016) are (1) people do not like their work, and therefore they tend to avoid responsibility which necessitates constant direction, (2) people have to be forced, controlled, and threatened in order to deliver work (3) workers have to be supervised in all the assigned tasks, and (4) workers have no motivation to work and therefore they have to be enticed in order to meet the set goals. Generally, Theory X has a negative view of human nature which demands that humans should be treated harshly for enhanced productivity. Managers with these assumptions reward good performance and punish poor performance as a way of motivating employees to work. The basic assumptions of theory Y according to Boddy (2016) are (1) people find work enjoyable and in a good work environment, they experience motivation and fulfilment, (2) people are capable of self-direction and self-control, and (3) employees have the ability to intellectually contribute to the operations of an organisation (Aykut 2019). Generally, theory Y assumes that employees care about the organisation, seek responsibility and exercise self-control thus have the ability to be more innovative and creative, which would benefit the organisation. Managers with these assumptions believe that employees need a favourable working condition to complete their work and contribute to the organisation’s performance (Boddy 2016).

I would agree with Hofstede’s argument that the assumptions of McGregor’s theories are based on the observations in Western cultures, which affects their applicability in the Eastern cultures. Theory X, for example assumes that employees are lazy and therefore they have to be controlled and punished for an organisation to attain its business objectives. Although this could be evident in individualistic cultures, it might not be the case in collectivism cultures as all employees work together as a team to help the organisation achieve its objectives. Theory X also assumes that punishment is a good approach to enhancing organisational performance but this would not work in the Eastern societies in that group work is promoted in organisations and punishing a whole team could be a challenge. Additionally, individuals that value collectivism are motivated by intrinsic rewards and therefore punishments would not lead to the desired behaviour. Further, the Eastern cultures value emotions, long-term relationships, and family ties and therefore are more likely to develop emotional attachment with an organisation as a result they would care about the organisation and do their best to see the company achieve its strategic goals: this does not support the assumption of theory X that employees do not care about an organisation. Globalisation has facilitated information flow and knowledge sharing and therefore I expect that employees have the intellectual capacity to contribute to business operations which does not align to theory X assumption that people are intellectually incapable of performing their roles. Today, due to the effects of globalisation and technology as well as global cultural convergence, there is interplay between the values of individualistic and collectivistic cultures and the result is a workforce that is autonomous but connected at the same time (Boddy 2016 & Chen et al. 2017). Therefore, although McGregor’s assumptions may not all apply in the Eastern societies, some would apply especially the theory Y assumptions particularly in culture with commerce connections and strong trade (Boddy 2016).

2b: Maslow’s Theory of Human Needs

According to Maslow (1943), the needs of employees must be realised for them to be motivated. Maslow then identifies five levels of human needs: psychological, security, social, self-esteem, and self-actualisation, which must be achieved for employees to be motivated. The psychological needs are seen as the most basic thus the starting point in Maslow’s motivation theory (Boddy 2016). In an organisation, psychological needs would be basic needs such as adequate workspace, fresh air, suitable temperature, and well-designed workstations among others. The organisation must also offer employees salary that enables them to satisfy their basic needs (Boddy 2016). Once these are provided, an employee would then look out for the security needs which would include safe office, job security, retirement benefits, health insurance, and stable salaries and wages among others. Once the psychological and security needs are gratified, employees will then have social needs which would include need for love, belongingness, and affection. Self-esteem needs would then emerge which relate to high-evaluation of an individual. Once this is gratified, the employee will not be motivated unless he/she is doing what they are empowered and capable of doing. Frederick Taylor believed that salary and wages are the most important motivators for employees (Boddy 2016), which related to Maslow’s notion that psychological needs are basic thus employers must give employees salary that will help them meet their basic needs. Taylor’s carrot and stick theory assumes that employees will only work if the reward is big enough (Boddy 2016), which relates to Maslow’s idea that one level of needs must be met for the employee to pursue the next level. By categorising human needs into five levels, Maslow hints that the higher the level of needs attained, the more motivated a worker would be, which in the words of Taylor means that employees will work if the reward is big enough.

2c: Herzberg’s Two Factor Theory

The motivator factors directly relate to job content thus are intrinsic to the job such as the psychological need for growth and recognition. The absence of motivator factors would not be dissatisfying but their presence strongly motivates employees (Boddy 2016). On the other hand, the hygiene factors are indirectly related to the job as they relate to the conditions arund the job (Boddy 2016). When the hygiene factors are not present, they dissatisfy employees but their presence has no significant effect on motivation (Boddy 2016). Motivators could include recognition, achievements, promotion, and opportunities for personal and professional development. Hygiene factors on the other hand could include interpersonal relations, technical supervision, compensation, social benefits, and HR policies.

2d: The Psychological Contract

Boddy (2016) define psychological contract as a person’s beliefs which are shaped by an organisation regarding mutual exchanges between the organisation and the employee. In my career, I expect that my employer will provide training and development opportunities, opportunities to work with others, fair pay and compensation, positive communication and timely feedback, job security, and a favourable work environment in terms of workplace design and a culture that considers my personal values. From a part-time employer, I expect a flexible work schedule such that am able to balance work and studies, practical tasks so I can put to practice what I am learning in class, a fair pay, supportive supervision so that I am encouraged to take risks as I put classroom theory into practice, and a mutual friendly cooperation with the supervisor so I am free to ask questions and seek guidance.

Part C: Managing Operations and Quality

3a: Operations management in the fashion industry

Although process consistency is an integral part of good operations management in many industries, it may not work in the fashion industry given the ever-changing consumer preferences. One of the major challenges in setting up an operations system to serve the needs of consumers in the fashion industry is customisation. Today, the world has a higher proportion of millennials who are significantly driving demand for customised products. A study conducted by Ribeiro et al. (2014), shows that more than half of consumers in the fashion industry are interested in customised products and are willing to wait longer and pay more but have an active role in design. Therefore, managers in fashion industries are faced with the challenge of opening opportunities for personalised manufacturing. This has significantly affected process consistency in that every product has to be manufactured based on the preferences of individual customers.

3b: Globalisation and Zara’s success

Zara is operating as an international company with more than 2266 stores located in more than 96 countries across the world. I think the tendency towards globalisation is favouring Zara’s success: Zara is free to open subsidiaries in different countries and given that it has a culture of customer co-creation, the cultures and preferences of its customers across the world does not negatively affect the demand of its products given customers are involved in the design on products. With this approach to operations, Zara is able to serve the needs of all its customers regardless geographical boundaries and cultural differences.

3c: H&M’s Operational Strategy

H&M is a major competitor to Zara and it operates internationally. However, its operational strategy is different from that of Zara. H&M is driven by the desire to make great design available to everyone in the market in a sustainable way. In order to meet the needs of different customer segments, H&M designs a wide range of products such that every consumer is able to identify his/her own personal style. This approach differs from that of Zara in that the latter has customers as part of the production process where the inputs of customers play a major role in the operations process. In addition, H&M has a fast fashion model whereby it designs a large volume of merchandise and moves it from the designer table to the showroom floor in the shortest time possible. On the other hand, Zara embraces customisation and delivers its products to individual customers regardless the time it will take to deliver the personalised orders.

3d: Operational challenges in remaining a world leader

Some of the operational challenges Zara would encounter in remaining a world leader would include inability to attract and retain best talent, how it responds to changes in the business environment, inability to develop a corporate culture that suits employees with diverse cultures, the rise of new entrants who bring new ideas and products in the fashion industry, and inability to match its ability to manage change with the speed at which the global business environment is evolving.

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