2.2 Human Rights
With many companies focusing on profit maximisation, they might fall to moral myopia or moral blindness to achieve their goals. One of the key issues of human rights is the use of child labour. Many consider child labour to be inhumane and abusive in nature as young children are often underpaid and work in dire conditions.
Labour laws vary from country to country and in Australia, home country to Boost, a child has to be of 14 years and 9 months to be able to be legally employed while age varies for full-time positions. Boost needs to acquaint itself with the various employment laws in the countries it operates in.
Taking precedent would be the infamous Nike child labour and sweatshop incident where it was reported that the company, which Nike has outsourced, its productions to made the employees work more than 60hours per week with workers who refuse to work overtime being punished.
2.3 Ethical Concerns
Ethical concerns are important in business practices and research endeavours in organisational chain management. In particular, ethical concerns become evident in situations of asymmetric relationships across organisations. However, sometimes it is hard to determine which act can be considered of ethical value and which is unethical (Svensson 2011, 21).
Ethical issue refers to the concept of what is right and wrong on the basis of how businesses conduct their relationships with others. Robertson and Crittenden (2003, ) stated that “varying legal and cultural constraints across borders have made integrating an ethical component into international strategic decision quite challenging”. Sometimes managers will have these dilemmas of determine ethical and unethical societal norms due to the complexity of the national and cultural factors in particular host environment.
Many practices that are considered unethical or even illegal in some countries are accepted in other country. Some of unethical issues that global managers will potentially face are that of bribery and nepotism. Bribery refers to an action of giving, receiving of something value to influence an action of the other where it is different from gift giving to bind social and familial ties.
In many Asian countries, it is the norm to receive bribery whereas Westerners often regard it as a shameful action. When doing business in a country where bribery is customary, managers may need to provide extra payment or favours as that is the culture. Thus, it becomes a dilemma for manager to adhere to their ethical standards in the face of foreign custom and follow the local ways to remain competitive.
Nepotism is “favouritism shown or patronage granted to relative” in business (Tuff 2005, 55). Certain countries believe nepotism is the right practice. Sometimes without any ill-intention, some companies may have the entire family in the top management without any considerations about the educational background of each individual. There is nothing wrong with a family member as a top manager as long as it is supported by capability and skills and performance is judged base on merit.
2.4 Diversity in the Workforce
As mentioned by Lattimer (1998, 5), as more companies operate beyond national borders, the challenge of diversity has moved from a social ideal to becoming a practical business mandate. Organisations nowadays are seeking employee from miscellaneous background that embrace on social knowledge, linguistic and culture to adjust the business and practice to fit the customer expectation.
According to Ely and Thomas (2001, 230), diversity is imbedded in individuals and includes both visible and non-visible aspects by which individuals categorise themselves and others. These aspects include race, ethnicity, religion, age, sexual orientation, gender, nationality class.
It becomes a challenge for HR manager in facing the diversity in the workforce where it can result in discrimination and harassment. Discrimination refers to any practice that distinguishes different groups based on characteristics defined in the anti-discrimination legislation and resulting in one group being at the advantage and the other group facing disadvantages. For example, gender stereotypes and unfairness. Harassment is behaviour designed to make a person feel unwelcome, offended, humiliated and intimidated.
These issues often faced by managers operating globally. Discrimination and harassment can create a hostile work environment for the employees and hinder the daily operations of organisation. Furthermore, it might also result in the company having a negative reputation.
3.0 Critical Analysis of Key Issues
3.1 Cultural Distance
Shared culture is a precondition for the formation of a society (Buzan 2010, 5). The general perception regarding culture is there are major differences between Western and Eastern countries, suggesting that the shared cultures are different.
With differences in cultures between nations, national culture will further impact organisational culture (Essounga 2009, 72) which becomes problematic for businesses looking at expanding their businesses globally. For example, Disney Company in Paris lost 1 billion dollars in the first 18 months of its operation resulting from the hostility culture of French towards the Americans.
Zhang (2010, 72) suggested that globalisation countries grow to be bicultural where the society at large does not own a common set of culture. Different generations hold different sets of common cultures. Emerging trends have it that the young generation of today are becoming more open-minded and will accept others cultures easily.
However, the blind adoption of Western management practices will lead the company towards failure. Companies should avoid adopting a standardised approach for management practices but tweak it according to local needs (Jelavic and Ogilvie 2010, 56). Example can be seen from McDonald’s glocalisation; offering different products according to the market demands.
3.2 Human Rights
There are growing concerns of human rights in the society attributing to the rise in global companies pledging to abide to the UN Global Compact. For example, principle 2 of global compact: “Business should make sure they are not complicit in human rights abuses” (Unglobalcompact.com n.d.). Due to globalisation, UN Global Compact brings attention of issues many think are norms for global businesses (Stohl 2010, 56).
There are also companies, which do not comply, often refusing to take an ethical stand and take advantage of regulation differences between countries. An example would be Nike sweatshop. Developing countries are usually weak in the implementations of law, resulting in frequent cases of human abuse. For example, Green Construction Material Chemical Factory in China was involved in abuse cases (Global Times 2010).
Growing expectations from society leads to companies recognising the need to engage in ethical practices and being accountable to stakeholders, therefore, human rights is a challenge for international management (Soysa and Vadlamannati 2011, 25). Practices of business regarding human rights will impact the image of the business, which in turn affects the profitability of the business.
3.3 Ethical Concerns
Ethical issues are challenges for international manager because economies and companies are interrelated as a result of globalisation (Romar 2004, 668). For example, Enron wrecked havoc to the world economy and adversely affected investors and retirees depending on their pension funds. The root of Enron’s case is the management of Enron had placed their self-interests over ethical conducts and stakeholders.
Ethical issues are considered challenges because we assume that there are differences in ethical principles between local markets and at international level. With a uniform code of ethics created by United Nation (Yucel, Elibol and Dagdelen 2009, 103), ethical issues would not pose as challenges anymore as there are standards and protocols to follow.
Ideally with a standard operating procedure in place, ethical issues will no longer pose as challenges for international managers but it is hard for individuals to implement because individuals have different value systems.
3.4 Diversity in the Workforce
Diversity in the workforce is a challenge for international manager because it makes the motivation and retention of talents more complex. It has been suggested that companies should tweak their benefits and compensation structure to motivate employees (White 2009, 6). For example, with Chinese employees in the firm, management would need to consider allowing them more family time as there is a one child policy in China which put family responsibilities on the only child in the family.
Diverse workforce can be a competitive advantage for organisation. A diverse workforce helps to reduce unconscious bias and prejudices by providing better decisions and innovation (Ollapally, Bhatnagar 2009, 456). Increasing the diversity of organisation also helps in encouraging better corporate social responsibility (Bear, Rahman and Post 2010, 210).
4.0 Solutions to Challenges of Globalisation
4.1 Cultural Distance
On top of human relationships, Boost also needs to take into account its organisational culture. With a relatively flat and organic structure and less formal reporting system, employees enjoy autonomy and are empowered to make decisions. Power distance between superiors and their subordinates is also low, resulting in faster feedback time which is critical in the highly competitive service line where customer satisfaction and loyalty is essential in the company’s success.
To operate efficiently and effectively, HR department should adopt a moral universalism standard, a moral standard that can be accepted by all, across the different business units throughout organisation. Boost should have standard operating procedures throughout its franchises and conduct audits regularly to ensure consistency in standards. Issues such as offering questionable payments should also be stated clearly in the company’s code of ethics.
4.2 Human Rights
As Body Shop founder once said, “Campaigning and good business is also about putting forward solutions, not just opposing destructive practices or human right abuses.” Organisation needs to have values such as “social responsibility, respect for human rights, the environment and animal protection, and a belief in Community Trade” in place. The organisation will only succeed when employees work towards “common goals and share common values” (Welcome to Anita roddick.com n.d.).
Many firms in highly developed economies are opting to relocate their production lines to that of the third world primarily for the cost savings, resulting in rapid economic development in China and India fueled by the offshore location of first world organisations. In this aspect, globalisation shifts income and wealth from the first world to the third. Organisations may directly or indirectly engage in dubious activities such as being involved in sweatshop labour, exploitation of child labour, underpayment of services, and low-cost, high-profit slavery. To counter this breach of basic human rights and also to avoid negative press once consumers are aware of the firm’s activities, organisation need to thoroughly screen its operations and those of suppliers’.
4.3 Ethical Concerns
Consumers of today are more educated and demand more information of their consumption needs. They would want to know the country of origin of the ingredients used, and how the ingredients are passed through the supply chain. Consumers may even boycott a particular brand because of actions they deem unethical or are not in line with their principles. For example, some brands were shunned as products were tested on animals. Many also questioned the credibility of Coca-Cola after reports surfaced that the corporation has misled people into thinking that its plant in India practices good stewardship of water and of misleading advertisements of Vitaminwater (Lennihan 2010).
Additional cost in marketing support is needed to exercise transparency. With consumers being more vocal and social media contributing to viral marketing, Boost needs to be extra cautious of activities its franchisees engage in under the brand name. With increasing negative publicity on genetically modified (GM) food, Boost has to ensure that its supplies are not contaminated and that sources are reliable, and not try to attain economies of scale by working with groups like Monsanto Corporation.
To minimise risks from ethical and CSR issues, Boost can implement the following policies:
- Set up a code of practice and conduct as part of the employment contract
- Institute penalties and punishments for unethical behaviours
- Set up a compliance department to monitor and pay attention to legal issues
- Have an effective whistle-blowing system in the workplace with confidential disclosure
- Devise a Corporate Governance Framework (CGF) to create self-regulation
4.4 Diversity in the Workforce
Moore (1999, 210) stated that, “recognising, understanding and valuing differences is key, particularly in light of the dual trends of globalisation and the increasing participation rates of diverse groups in the workplace”. If not addressed appropriately, diversity in the workforce may lead to conflicts and the emergence of sub-cultures may lead to further tension among employees. For instance, although English may be used as the main spoken medium, different people may have different interpretations and hence lead to miscommunication and misinterpretation. To better manage diversity, the top management has to recognise the context culture of the organisation, the homogeneity, the management style, and the cultural profile. Diversity also affects employees’ attitudes, social organisation, thought patterns, roles and languages, however, in juxtaposition, diversity also brings about increased creativity and new ideas, attitudes, talents, experiences and language skills.
With franchises in many countries, which can inevitably lead to clashes, or conflicts in culture, the employees of Boost have to work with people of different beliefs, backgrounds, gender etc. HR managers need to familiarise themselves with the different employment legislations such as the use of bumi putera in Malaysia and the Women’s Charter Act in Singapore.
5.0 Human Resource Management and Globalisation
When companies expand to other countries, expatriates are often called to manage the operations overseas. Companies will do a cost-benefit analysis to examine the potential benefits the expatriate will bring (McNulty, Cierri, and Hutchings 2007, 1311). Effective HR is aligned to organisation’s direction and strategic plans. After attaining new competencies, employees can move up in workplace hierarchy or be groomed as part of succession planning. HR should provide training and candidates are selected based on pre-determined criteria such as propensity for risk-taking (Reine and Trompenaars 2000, 240). Expatriates will also be judged based on competencies, motivation, relational skills, family, and languages spoken. They should be proactive in improving managerial skills, self-confidence and other attributes like tolerance for ambiguity, multiple perspective and ability to work with and manage people (Deresky 2010).
6.0 Recommendations
To succeed in a globalised economy, Bosst need to work closely with HR to develop programs in aligning the company’s strategic plans. Emphasis on providing relevant training and teambuilding programs to ease cultural distance gaps, to publicise the company’s stand on human rights issues, ethical concerns, and working within a diversified organisation and environment need to be stressed to employees, especially global managers.
Boost should incorporate best practices such as Six Sigma and just-in-time production into its production line to enhance efficiency and increase market shares from direct competitors such as Orange Julius and New Zealand Ice-cream. Instead of competing head-on with competitors, Boost can also form strategic alliances with other companies so that each can take advantage of the other’s expertise and also share resources. For instance, Boost can team up with an established café and develop a theme café selling organic and vegetarian food. More emphasis can also be made on its involvement with community and sustainability projects to further entice consumers with concerns on social and environmental issues.
7.0 Conclusion
In conclusion, the areas identified as the main implications of globalisation on HR managers are cultural distance, human rights, ethical concerns, and diversity in the workforce. To effectively and efficiently manage a globalised workforce, HR managers need to communicate and understand different needs of employees, identify the values and demands of stakeholders, operate legally and ethically in both home country and host countries, and take advantage of the various skills and competencies the diversified workforce has to offer.
To thrive in a globalised economy, Boost has to anticipate future challenges and management must have to foresight to set short-term and long-term plans. Furthermore, Boost should learn from others’ past mistakes and tap on the expertise of market leaders.
At the multinational stage of development, Boost expands its operations through franchising. Boost is able to contribute to the economy through “employment, new job creation, development of new products and services, and international operations (Deresky 2011, 22). With the mission, the company is able to identify where it is standing and where it is headed. Management will then follow up with an environment assessment and scan forecasting trends, competition, and other factors that can affect the operation. Strategies to achieve objectives will then be set with analysing the attractiveness of the overseas market such as the barrier to entry (Appendix 2).
8.0 Appendices
Appendix 1
SWOT Analysis
Appendix 2
(Deresky 2011)
9.0 References
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