Human Resource Management and the Implementation of Change

Paritosh Mishra, Balvinder Shukla, R Sujatha

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000510898
• Edition: 1
• Topic: Business
• Subtopic: Organisational Development
• Index: Business

With the increased pace of global, economic and technological development, change has become an inevitable feature of any organisation to survive in the competitive market. If it is a planned change process, the HR practitioner can use any of the existing general models or theories of change and use suggestive interventions to increase effectiveness and capability to change itself. When the magnitude of change is unpredictable or the degree of the organisational process or systems is unorganised, the existing models or practice of planned change is still in the formative stage, and there is room for continuous refinement and improvement.

This book will bridge this gap in the current organisational development and change literature by benefiting the HR practitioner with six real case studies. The cases bring out the interventions adopted, key activities associated with the successful implementation of interventions and the critical role played by HR in achieving organisational effectiveness. This book captures the transformational journey of a diverse set of companies and weaves various dimensions into a common coherent framework for the field of HRM in Change Management. The case studies illustrate six powerful organisational experiences, listing the major activities contributing to effective change management from motivating change, vision, support from key stakeholders, transition management to organisational and HR commitment for implementation.

By demonstrating the role of HR as a 'change agent, ' this volume will be valuable to researchers, academics, managers and students in the fields of human resource management and change management.

1

Global Efficiencies Through Local Practices

DOI: 10.4324/9781003191384-2

The entire gamut of social, cultural, economic, legal, institutional and political factors which make Indian business firmament a vortex of complexities proffers immense challenges to foreign companies right from the day of their initial entry to the Indian market to the execution of core functions. Such challenges range from significant inter-regional diversities within India to poor infrastructure and delays on account of systemic inefficiencies and corruption (Budhwar & Varma, 2011). This is true for the Human Resource Management function as well. Comparisons in terms of cross-cultural management show that India cannot be clustered into any of the formations of groups of nations because of its uniqueness (Sparrow & Budhwar, 1997), plummeting the potential for regional synergies.

Further, in view of the scarcity of literature on HRM in multinational companies (MNCs) in developing economies, strong variations in the inter-nationalisation strategies among the emerging markets’ MNCs (Sethi, 2009; Yaprak & Karademir, 2010), and the momentum in growth and change in many developing markets, the managerial systems of many MNCs are still evolving and are in a state of instability (Ghemawat & Hout, 2008).

Global Integration and Local Differentiation

In the past, there have been numerous deliberations regarding the management of multinational corporations with respect to their modes of entries into foreign markets, regulation, co-ordination, management of knowledge across subsidiaries and joint ventures (JVs) (Bartlett & Ghoshal, 1988), embracing of ethnocentric, polycentric or geocentric methods of structure of their Human Resource Management systems (Dowling, Festing, & Engles, 2008; Perlmutter, 1969; Tung & Lazarova, 2006; Zhu, 2019), global integration versus localisation of practices and multi-domestic or transnational structure and strategy (Bartlett & Ghoshal, 1988; Cela & Gatto, 2018; Paik & Sohn, 2004; Prahalad & Doz, 1987). A conglomerate of factors such as context, company, local unit and International Human Resource Management policy working in unison influences the choice for an approach (Dowling et al., 2008). This results in global standardisation and localisation or ‘glo-calisation’ of HRM systems of MNCs.

The success of multinational corporations is ascribed to the efficacy of human resource management (HRM) (Bartlett & Ghoshal, 1995; Hosain, Arefin, & Hossin, 2020; Pucik, 1992). Several reasons may converge to propel multinational corporations to organise their Human Resource Management internationally and to transfer their parent practices to their subsidiaries abroad. If a firm has a positive experience with some specific Human Resource approaches, it may like to standardise them at the global level. Especially so, if it feels these are befitting to the local conditions (Dickmann & Muller-Camen, 2006). Vital reasons for this may be economies of scale, superior level of service delivery and better global synergy and efficiency (Bartlett & Ghoshal, 2002). Business practices that mirror core competencies and superior knowledge are assumed to be a source of competitive advantage (Bartlett & Ghoshal, 2002), and hence, MNCs would pursue to transplant their HRM practices, which have already been tested to be the right ones, into their operations in emerging economies (Beechler & Yang, 1994; Dowling & Welch, 2004; Hannon, Huang, & Jaw, 1995; Hetrick, 2002; Myloni, Harzing, & Mirza, 2004; Tayeb, 1998). Schuler, Sparrow, and Budhwar (2009) have contended that International HRM is critical for the success of MNCs, which often makes the difference between survival or extinction.

Kostova (1999) maintains that subsidiaries of MNC “may develop perceptions of dependence on the parent” due to various resources such as technology, capital and promotion of the subsidiary staff. She suggests that “under such conditions of dependency and intra-organizational competition”, a subsidiary will seek to implement the parent company’s practices as a method to gain internal legitimacy. Such resource dependence framework indicates that the greater the movement of various resources between the parent and the subsidiary, the stronger the MNC will exercise control over the Human Resource practices of the subsidiary (Kim & Mauborgne, 1993).

Brewster, Wood, and Brookes (2008) have observed that even though there is some indication of common global Human Resource practices among MNCs, enough diversity in practices persists, which could be explained by the persistent effects of institutional realities. Cultural, cognitive and normative institutional practices enveloping in the background of the host country play significant parts in the HRM practices in conditions of uncertainty (DiMaggio & Powell, 1983; Levitt & March, 1988). While the institutional theory has been widely used in the study of MNCs, Kostova, Roth, and Dacin (2008) propose that there lurks a hazard of an “implied institutional imperialism” in the Western interpretation of the role of MNCs, and, hence, they suggest broadening the theoretical paradigm on adopting a “blended institutional perspective, where the broad concepts of social embeddedness of organisations are intertwined with the ideas of agency, social construction, power and politics” (p. 1003).

Edwards (2004) observes that “employees, as actors at various levels of plant may be reluctant to share their knowledge, expertise with their counter parts expatriate employees, for fear of undermining their performance within the group”. This could lead to organisational politics which could play a pivotal role in what and how much of multinational cultural practices could transfer from the parent company to subsidiaries.

When a JV or subsidiary is largely entrenched in a home-grown setup, its Human Resource practices are greatly tampered with by local forces (Rosenzweig & Nohria, 1994; Wright & McMahan, 1992). It has been reported (Braun & Warner, 2002) that the HRM practices in organisations in which the MNC holds a minority share are more locally adjusted than those in foreign completely owned and majority-owned units. Farley, Hoenig, and Yang (2004) observe numerous important alterations in HRM practices between foreign subsidiaries and JV s. The background and profile of the HR manager are expected to influence the effects of isomorphic pulls. An HR manager recruited from a local organisation is more likely to identify native companies as the referent point and this is likely to affect the type of initiatives advocated and executed in the unit (Bjorkman & Lu, 2001; Shenkar & Zeira, 1987).

Dicken (1994) describes the business processes as a blend of intra- and inter-firm structures of relationships, designed by dissimilar grades and forms of power and effect over inputs, throughputs and outputs. The survival of a multinational corporation in a host country, thus, rests on its flexibility to adapt to the established national culture and simultaneously striving to attain the strategic goals for the parent MNCs as “networks of alliances” that criss-crosses the national boundaries and industrial sectors (Lorange & Johan, 1993).

In emerging economies like China and India, even as there exists a big group of local labour, the abilities and competencies required for employability as international standards are still lacking (Budhwar & Varma, 2011; Ready, Hill, & Conger, 2008). At the same time bringing in expatriates in large numbers is both costly and unviable. Ready et al. (2008) contend firms have no alternative but to cultivate local talent. In such a scenario, initially Rosenzweig and Nohria (1994) and later Ryan and Gibbons (2011) trust that the shifting global occupational trends are drawing MNCs more towards local sensitivities or isomorphism than towards global integration.

MNC’s subsidiaries and JVs are perceived as tampered both with institutional factors in the host country and with global isomorphic processes, such as downward spiral of pressures from the MNC’s parent company (Westney, 1993). The management of human resources in a multinational corporation is influenced by several contextual factors, such as the country of origin (Harzing & Sorge, 2003), corporate strategy (Bartlett & Ghoshal, 2002), International HRM strategy (Taylor, Beechler, & Napier, 1996), business structure (Ulrich, Younger, & Brockbank, 2008), International HRM structure (Farndale et al., 2010), CEO perceptions (Brandl & Pohler, 2010; Chung, Bozkurt, & Sparrow, 2012) and cross-cultural issues (Gupta & Bhaskar, 2016).

Researchers have demonstrated that there exist several obstacles to the success of the transfer of international practices to host countries; some pertain to the features of the initiatives being transferred and others to the cultural mores and organisational contexts (Ghoshal & Bartlett, 1988; Szulanski, 1996; Zander & Kogut, 1999). Some contend that regional-level policies, laws and institutional factors, mediate the push of globalisation and form responses at the national level, and hence, it may be likely that region-alisation will affect convergence between firms originating from the same region, but divergence inter-regionally (John & Chattopadhyay, 2020).

Kostova (1999) suggests that the fruitfulness of international transference of organisational processes is intermediated by the equivalence between three different sets of factors, relating to the social, organisational and relational contexts. The social context is the institutional remoteness between the geographies of the company in the country of origin and the host country. The organisational context is the organisational culture of the host country. And the relational context is the background of relationships between the parent company and the recipient unit. Kovach, R.C. (1994) and Kovach, K.A. (1995) also highlight the problems involved in the transference of practices to different subsidiaries worldwide because of the perceptual divergences among employees of dissimilar nationalities.

To resolve such issues, MNCs and their JVs and subsidiaries should seek an equilibrium between the execution of HRM practices that conform to the reasonable expectations and necessities of the host country and the pursuit of more distinguishing practices in their country of origin (Gunnigle, Murphy, Cleveland, Heraty, & Morley, 2001). To face realistic challenges, MNCs do have the best approaches from both HQ and host country culture (Doeringer, Lorenz, & Terkla, 2003).

Whether new ideas and innovation are pursued to be developed within each host country subsidiary or pursued to be cascaded down to the entire network of the MNC by the parent company would depend on the context and situation of each case. Many modern MNCs, therefore, need to choose a transnational strategy, to master both the art of cost reduction and local differentiation for maintaining a competitive edge (Bartlett & Ghoshal, 2002).

The role of parent organisation would be to effectually draw the lines of demarcation between degrees of centralisation and control and the degrees of decentralisation and autonomy while deciding whether to allow the subsidiary units to take independent decisions in response to the local demands enforced by its native context (Doz & Prahalad, 1984).

Blue Dart: Company Background of a German Multinational’s Indian Acquisition

Couriers have been around for several years. The earliest of the couriers were runners and horseback riders, who delivered messages. These were the days before the advent of mechanised transportation, so foot messengers ran for kilometres to reach their destinations. Organised courier industry started in India in 1979 as DHL Worldwide Express entered the Indian market through a contract with Airfreight Ltd. ONGC was the first Indian corporate house which used their express services.

Blue Dart Express Limited is a leading express company in India. It was established as ‘Blue Dart Courier Services’ in 1983. Towards the end of 2004, DHL India, a multinational Logistics Service Provider (LSP) company, acquired a 68 per cent equity in Blue Dart. Blue Dart eventually evolved into being the largest third-party logistics service provider for most of the leading industry segments in India.

Third-party logistics (3PL) implies outsourcing transportation, warehousing and other logistics-related activities that were originally performed in-house, to a 3PL service provider. The outsourcing part is now converted into fully integrated logistics solutions and is taken care of by Logistics Service Providers (LSPs) which provide multiple benefits of cost reduction, in-time delivery and improved efficiency of the supply chain. Third-Party Logistics providers (3PLs) are also referred to as logistics outsourcing or contract logistics. However, this service these companies provide is more than just outsourcing or subcontracting (Marasco, 2008). Typically, outsourcing or subcontracting deals with a single product or for a single function, or with a single vendor. However, 3PLs provide manifold logistics services for multiple products to multiple vendors concurrently (Wee Kwan Tan, Yifei, Zhang, & Hilmola, 2014).

3PL is defined as “the use of external companies to perform logistics functions that have traditionally being performed within an organization” (Lieb, 1992). LSPs are “Companies which perform logistics activities on behalf of others” as averred by Delfmann, Albers, and Gehring (2002).

Stretching open the rolled-up scrolls of history, one would see the concept of logistics outsourcing originated during the Middle Ages. In Europe, the origins of several LSPs can be traced to the Middle Ages (Lynch, 2002). Outlining the evolution of logistics outsourcing during recent times, it is found that, in the 1950s and 1960s, logistics outsourcing was limited to transportation and warehousing. The transactions were mainly short-term. In the 1970s, the importance was attached to improved productivity, cost reduction and long-term contracts, while value-added services such as packaging, labelling, systems support and inventory management were proffered in the 1980s. Since the 1990s, outsourcing has gained momentum, and more value-added services are being provided. Some of them are import/export supervision, customs authorisation, freight forwarding, customer service, rate negotiation, order processing, assembly/installation, distribution, order fulfilment, reverse logistics, consulting services that include distribution network planning, site selection for facility location, fleet management, freight consolidation, logistics audit, etc.

The services of Logistics Service Providers are extended from transportation and warehousing into integrated logistics solutions in the form of one-stop destination for all shopping (Kumar & Singh, 2012). Now, logistics service providers perform multiple functions such as bulk procurement, inbound and outbound transportation, order processing, warehousing, fleet management, shipment consolidation, distribution network optimisation, value-added services and speedy on-time delivery to the end-users (Kumar &am...

Table of contents

• Cover Page
• Half Title Page
• Series Page
• Title Page
• Copyright Page
• Contents Page
• List of Figures Page
• List of Tables Page
• Acknowledgements Page
• Preface Page
• Foreword Page
• Introduction
• 1 Global Efficiencies Through Local Practices
• 2 Transformational Journey of an Indian ‘Maharatna’ Company
• 3 Professionalisation of Family Business
• 4 Changing Contours of Unionism and HR as an Enabler
• 5 HR’s Strategic Interventions: A Study Against Miles and Snow’s Typology
• 6 Critical Success Factors in ERP-SAP Implementation and HR
• Conclusions
• Appendices
• References
• Index