HRM concerns in the implications of western companies setting up in Asia and Far East
HRM concerns in the implications of western companies setting up in Asia and Far East
Introduction
Intel opens first chip manufacturing plant in China: IDG news service October 25th 2010 and at the same time to open another billion dollar chip plant in Asia. Analysing the underlying reason behind this news is the globalisation which has being intensified during the past two decades and the increasing global competition which has led many European companies around the world to do some significant changes to their companies such as moving on to a much developing areas such as Asia and Far East.
Offshoring to India
As for most of the multinational companies, (MNC) if production involves a lot of information technology they consider moving into countries like India. This is done because out of the 3.1 million graduates that enter the workforce 20 % of them are capable of speaking English and the salaries are 80% lower than the salaries compared in western countries. Thereby in order to take the advantage on this deal MNC‘s such as IBM, HP have moved some of their facilities to base in India. Although the labour is cheap there have being many HRM implications due to the HRM policies being different from what they have in western countries to HRM policies they have in India. In India most of the HRM policies and practises are still very influenced by castes, social relationships and politics. Another common problem is the lack of skilled work force especially in areas such as middle management. In some companies the recruitment procedures are have being very weak and some interview are done through the phone and half the employees even turn up for a proper interview. The annual personal turn over ranges from 20 to 80 & at some companies and due to lack of skilled staff the companies have being forced to an annual increase in salaries between 10 to 20%. Due to this increase of salary the actual purpose of offshoring the product facilities are currently in danger. Because in the long run the amount the companies pay to their employees will eventually match the amount they will pay to the staff in a European country. Another problem is the weakness shown in HRM practises which involves training and development which will help the companies develop a good long term relationship between the staff and finally to have a well-qualified employees. The implication here is that companies do not provide career development and training as much as they do in other western countries. As we can see there is an obvious fault in intended strategy here due to certain events when there is a larger personal turn over and when the values of offshoring products are at a lost. In order to fix these problems to continue the cost reduction business strategies as followed by these companies and to help the method of ‘best practise’ shown by these companies there are certain SHRM procedures which could be carried out. As for authors critical thinking when it comes to MNC’s operating in a new country such as the scenario’s described above it is always important to have a changing HR strategy rather than a written HR strategy. Although written strategies do have a high chance of working, here the factors and events might change unexpected since you are coming to a new market. Therefore as a solution the best action here will be to change into emergent strategies quick and put them into action. Here if the author was to incorporate a link between business strategy and the HR strategy holistic model would be a great way to incorporate the new human resources to pre-determined business strategies. It is always important to make up the HR policies and factors when business strategies are being formulated and this will eventually help organization to acquire a competitive advantage. As for the choose cost reduction strategy the table below (image) will show the employee role behaviour and of HR polices to be implemented as an aims and objective.
