GLOBALIZATION AND ITS IMPACT ON RESOURCE MANAGEMENT

ABSTRACT
In the last century, Human Resource Management (HRM) has evolved radically—both in
definition and application. As the world became increasingly globalized, HRM’s evolution and
significance to businesses became more apparent, forcing firms to formulate strategies that
enabled them to adapt to these changes.
This paper examines the effects of globalization on Human Resource Management (HRM)—
with specific attention to obstacles that companies encounter when implementing HRM
practices. Solutions to these challenges are also proffered—considering the consequences of
HRM and globalization on employees—while depicting the current economic, cultural, and
international realities of the world.
INTRODUCTION
Globalization simply refers to the interconnectedness of countries. It is the convergence of
cultures, economic systems, individuals, and ideas—driven by technological advancements and
policies that facilitate free trade. Globalization as a phenomenon (and process) has impacted
countries in numerous ways: from the elimination of border restrictions—characterized by
increased global trading—to the emancipation of businesses that now have unfettered access to
diverse markets.
Globalization also has its demerits. The technological tide that swept through the last millennium
caused the obsolescence of businesses that struggled to adapt to these changes. Companies have
had to continually alter internal business structures and adjust policies to reflect current global
realities.
One crucial aspect of company structure that has experienced profound change—especially in
the last three decades—is Human Resource Management. This is the management of employees
that enables them adequately utilize their abilities for optimal execution of their duties—to
achieve better overall performance for the organization. HRM in a company entails recruitment,
training, performance management, culture management, employee relations, compensation, etc.
All these HRM activities have been transformed over the years. The expansion of the labour
market, coupled with the interaction of diverse cultures makes it imperative that companies instil
adjustments to their Human Resource Departments. Globalization has raised awareness—among
a significant amount of businesses—of the importance of HRM and the challenges that need to
be overcome before it is efficiently exploited to expedite company growth.

THE IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

Every company possesses three kinds of resources: human, financial, and natural resources (like
land and buildings). These resources are utilized in several ways—to improve a company’s
competitiveness and augment the impacts of their goods and services. Human resources refer to
the employees recruited in different departments and roles within an organization. The impact
they have on the progress of organizations is widely unappreciated. In contrast to other forms of
capital, human capital—which is the economic value of an employee’s skills, knowledge, and
experience—has one unique characteristic: inimitability. It is easier for a company to possess
land and secure investments than it is to recruit and retain competent employees. Business firms
can develop strategies for increasing competitive advantage, by properly utilizing human capital
—something that competitors cannot imitate (Gautam, 2014). This is where Human Resource
Management becomes instrumental.
For HRM to be successful, the Human Resource (HR) department of a company would need to
hire the right people, successfully onboard them, create a fair and comprehensive compensation
plan, and continuously optimize their performance. The responsibilities of HR managers and
personnel have evolved over the years. HR is not just affiliated with employee engagement and
satisfaction any longer. Currently, planning human resource deployments and activities intended
to enable an organization to achieve its goals is the primary focus of HR departments around the
world. This is what is known as Strategic Human Resource Management (SHRM) (Gautam,
2014).
SHRM is essentially about adaptation and assimilation. Its implementation is to ensure that:
(1) HRM is fully integrated with organizational strategies and those that meet the strategic needs
of the firm; (2) HR policies correspond across policy areas and hierarchies; and (3) HR practices
are adjusted, accepted, and used by line managers and employees as part of their everyday work
(Sivalogathasan, 2008).
From a macro perspective, SHRM practices are macro-oriented, proactive, and long-term
focused in nature; it views human resources as assets or investments and not expenses.
Implementation of SHRM practices is linked to organizational performance and focuses on the
alignment of human resources with firm strategy as a means of gaining competitive advantage
(Sivalogathasan, 2008). However, the micro perspectives of SHRM intends to manage individual
HR practices strategically for optimizing the overall performance of these practices—to enhance
organizational performance (Gautam, 2014).
Currently, countries like the USA have created a highly inclusive workforce where individuals
who were never accepted in society—as a result of discriminatory policies and perceptions—
now have equal access to work opportunities. Racial minorities, members of the LGBTQ+
community, people with disabilities, ex-convicts, etc. are gaining employment in certain
positions that would initially have been difficult to occupy. This has prompted firms to
restructure HR practices to accommodate this change, while still being progressive and
eliminating dormant discriminatory policies.
Globalization has presented Human Resource Management with new obstacles. Multinational
companies and businesses now have access to labour, skill, and expertise from different
countries, and diversity within workplaces has never been so eminent. Companies have a whole
new challenge of managing across cultures and establishing a balance between opposing views
and practices while maintaining competitive advantage (Cesyniene, 2008).
CHALLENGES OF HUMAN RESOURCE MANAGEMENT IN THE CONTEXT OF
GLOBALIZATION

Multinational Companies (MNCs) always dominate discussions regarding globalization.

Increased competition makes it imperative that companies like these do not recede and lose their
foothold in the global market. They have realized the importance of utilizing human capital to
ensure competitive advantage and have also taken steps to improve Human Resource
Management (HRM). However, as countries, cultures, and economies become more
interconnected, new HRM challenges arise.
The process of recruiting skilled and knowledgeable workers has been simplified by technology
—specifically the internet. Hiring Managers can easily publicize job postings; HR can
comfortably interview and hire employees; trainings are now organized effortlessly.
Nevertheless, as a result of a myriad of opportunities for workers, one of the biggest difficulties
that companies face is employee retention. Arabandi (2011) observed that workers tend to be
more loyal to their career path rather than the organization in which they work. Loyalty has
become a value less about firms per se and more about a relationship to a network of people or
ideas. Workers appear to be attuned to the market, both domestic and international and take their
chances accordingly. In New Delhi, India, workers in transnational companies often know that
they are being exploited and paid much less than their American counterparts (Mirchandani,
2004). However, instead of becoming ‘ideal Indian workers’ promoted by the state in its effort to
attract and hold capital, workers view their jobs as transient and continuously search for
opportunities with more satisfying work. Workers often use the opportunities and training to
their advantage in gaining skills and experience—which they then use to sell themselves to other
businesses (Arabandi, 2011).
A significant amount of talented employees are mobile and always open to moving to other
organizations. Therefore, HR departments have to develop strategies that ensure employee
engagement at all levels. Employee engagement simply refers to the extent to which workforce
commitment—both emotional and intellectual—exists relative to accomplishing the work,
mission, and vision of the organization. Some human resource experts consider employee
disengagement a significant contributor to poor corporate performance and profitability—
numerous studies show how this can be costly for companies long-term (Ehambaranathan,
Samie, & Murugasu, 2015). Companies have also struggled with adopting optimal compensation
schemes that are largely contingent on the effects of globalization. Utilizing financial incentives
to retain workers tends to be effective. However, adopting plans that are incongruent with other
aspects of HRM—especially when it does not reflect the current realities of inter-dependent
economies—would always be insufficient. (Walsworth & Verma, 2007).
Another prominent problem associated with the implementation of Human Resource
Management is cultural diversity. As the world becomes more interconnected, cultures and
beliefs spread easily between countries. Globalization—with the aid of technological
advancements—facilitates the interaction of individuals from different socio-ethnic backgrounds
and cultures. Within the workplace, these could have certain advantages while also positing
challenges as well. Some negative impacts of a culturally diverse workplace are
miscommunication, creation of barriers, and dysfunctional adaptation behaviors (Martin, 2014).
HR departments also have to reduce these problems and ensure that employees are respectful
when interacting with others from different cultural backgrounds.

Technological changes—especially in information technology and telecommunications—have

revolutionized the global marketplace, causing organizations to alter work patterns, business
strategies, and Human Resource Management (HRM) (Sivalogathasan, 2008). These changes are
often challenging, considering that technology is still evolving and it is impossible to accurately
predict trends. Globalization has also transformed a significant amount of businesses into a
hybrid—on-site and virtual—workplaces, with some existing entirely as virtual corporations.
The term ‘virtual corporations’ imply that the organizations conduct activities predominantly
using the internet and other advanced technological tools. The development of virtual
corporations has several HRM implications (Sivalogathasan, 2008). HRM needs personnel who
are highly skilled, educated, and able to quickly understand the new forms of information and
technology—with the ability to integrate them into a ‘virtual office’ (Cesyniene, 2008).
Globalization has also created the gig economy that comprises skillful temporary workers
(generally referred to as freelancers) who often work remotely. They have different contracts and
are usually unrecognized as official workers. Nonetheless, in companies where they actively
interact with other workers and are acknowledged as official employees, HRM policies also
govern them.
The ‘internationalization’ of companies has been conceptualized as the extent to which foreign
interests may own a firm. As stated earlier, multinational companies are often highlighted as the
primary focus of globalization studies. Yet, when we recognize the pressures of globalization, a
firm that is otherwise largely domestic in its ownership or sales could be experiencing
‘international’ competitive pressures right at home. That observation was made by Walworth and
Verma (2007), they suggest, “If the adoption of certain workplace HR practices is driven by
competitive market pressures, then foreign ownership and sales alone cannot fully explain the
extent of adoption and its subsequent impact on innovation. Thus, there is a need to
conceptualize ‘internationalization’ of firms in a more integrated way that measures a firm’s
engagement with the international environment”
As companies become more engaged with international markets, they will face constant pressure
to innovate. This pressure—which often stems from competition—would require companies to
invent HR practices that heighten the innovativeness of employees. This may often be
challenging to businesses as it would require a complex and accelerated approach to Human
Resource Management.
SOLUTIONS TO THE NEGATIVE IMPACTS OF GLOBALIZATION ON HUMAN
RESOURCE MANAGEMENT
Sivalogathasan (2008) argues, “Changes taking place in the global business environment are not
often accompanied by complementary changes in human resource management practices,
leading to a situation whereby the failure of firms is due to the mismanagement of people, rather
than to problems with technical systems”. It is imperative for firms to study contemporary HRM
practices, to discern those which may or may not be efficient— especially considering the
context of globalization. Companies must assess their goals and develop sophisticated Strategic
Human Resource Management (SHRM) policies that enable them to achieve them (Gautam,
2014). They must realize that workplace Human Resource (HR) practices can contribute to
competitive advantage, not only by increasing productivity but also by facilitating workplace
innovation. HR departments would need to focus on enhancing innovation amongst employees in
ways that do not negatively harm them—these practices must prioritize employee satisfaction
and safety. Financial incentives and compensation schemes, as well as non-financial benefits—
such as employee engagement practices and specialized training programs—can be utilized to
encourage innovation in a workplace. These methods are known as high-performance workplace
practices (HPWP) and have been proven to increase organizational productivity, innovation, and
employee retention (Walsworth & Verma, 2007).
In addition to HPWP, to sustain innovation and employee satisfaction, companies should create
multiple channels for easy employee communication and feedback on HRM practices
(Sivalogathasan, 2008). This is also effective in tackling problems that emanate from a culturally
diverse workplace. Employees should be able to communicate grievances regarding unpleasant
office interactions—especially those that stem from cultural misunderstanding. Furthermore, the
advantages of cultural diversity in the workplace can and should be properly exploited.
Globalization has made companies include global expansion in their corporate agendas; a diverse
workplace allows personnel to overcome culture shock as the business expands in other
countries. Martin (2014) observed, “With expansion into other countries comes a range of
obstacles including, but not limited to, gathering information about local customs and laws in the
foreign country, assessing risk, and designing strategies to overcome those risks. When an
organization has a culturally diverse workforce, it can use the information and knowledge of the
individual workers to achieve these objectives and overcome the aforementioned obstacles”. To
educate employees and management about foreign cultures, companies usually hire trainers from
those countries or acquire training documentaries, books, and journals. A culturally diverse
workplace can reduce the time, cost, and energy spent in this process. Employees from these
countries—specifically those with lived experiences—can serve as trainers, practitioners, or
consultants regarding cultures and policies prevalent in those nations. This facilitates the process
of the company’s acclimatization and is a prime example of Human Resource Management
(HRM) to augment company objectives (Martin, 2014)
The problem of unpredictable and complicated technology can be tackled with the training and
education of workers. Walsworth and Verma (2007) argue that the accumulation of knowledge
comes from complex and dynamic interactions between the workplace’s own internal innovation
capacity and external expertise. Globalization ensures that companies have access to knowledge
through networks with external partners, such as clients, suppliers, and researchers. All of these
types of knowledge enhance the workplace’s internal innovation capacities. The rapid rate of
accumulation of knowledge and the fast pace of technological change would require regular
training to enlighten employees and enable them to upgrade their technical skills.
(Sivalogathasan, 2008).

CONCLUSION
Globalization has significantly transformed the policies and structures of organizations. Adapting
to these changes has been challenging and important aspects of company operations such as
Human Resource Management (HRM) have been severely impacted. Companies must be
observant of the new challenges of HRM inflicted by globalization—and formulate strategies to
tackle them. Accessibility to international markets, increased competition, technological
advancement, and cultural diversity are just a few effects of globalization that could alter
workplace dynamics and also impact employees. Strategic Human Resource Management
(SHRM) would enable companies to navigate these challenges while implementing new schemes
and strategies that simultaneously caters to the satisfaction of employees and the progress of the
company.
Companies should properly incorporate Human Resource personnel into their administration
structure—HR departments have to be actively involved in shaping corporate strategy.
Managerial competencies particularly in the HR function enhances the status of the HR
department and influences the level of integration between HR management and organization
strategy (Gautam, 2014). It is when these have been achieved, that companies can confidently
establish their brand, products, and services in the global market.

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