Transfer of HRM Practices: An Argument for Localization Essay

In the era of globalization and worldwide mobility, quite a lot of companies set on the next step in their development and become multinational corporations (MNCs). According to the Organization for Economic Cooperation and Development (OECD), MNCs generate around one-third of the annual global economic output (OECD, 2020). When expanding, they inject resources into the economies of host countries and often elevate local communities by providing them with employment opportunities. The dilemma that MNCs often face is the choice between global integration and local responsiveness in human resources management (HRM) practices, especially recruitment. Indeed, there are two juxtaposing trends in an international arena: while many cultures become homogenous, others carve an even stronger identity that affects the business environment. Therefore, the question arises whether recruitment practices should be standardized across all countries in which an MNC operates or rather adapted to integrate and respect the cultural specificity of host countries.

The existing literature provides several approaches toward the conceptualization of the global transfer of human resources management practices. It should be noted that there is not a single approach that dominates the modern paradigm, but it is rather, they should be combined to improve the understanding of the transfer process (Groutsis & Ozturk 2014). Chiang, Lemański, and Birtch (2017) point out five stages: configuration, the decision to transfer (by the headquarters), negotiation process, implementation, and internalization. According to the researchers, each stage is associated with certain difficulties.

In order to pinpoint what makes a transfer successful, Susaeta and Pin (2008) draw attention to external (contextual) and internal factors. Hofstede (1993) describes culture as the “crystallization of history in thoughts, feelings, and actions of the current generation (p. 5)”; it is the culture that often informs and guides employees’ and executives’ behaviors. As a contextual factor, culture is central to the cultural approach that argues that the effectiveness of HRM practices is contingent on their coincidence with the national value system. The comparative institutional approach narrows its scope down to the differences in the different national business systems and relevant institutions that influence labor and financial markets.

From a cultural perspective, an argument for the adaptation of recruitment practices is the cultural differences in what makes people happy in the workplace. Liu et al. (2020) opine that writing a good job posting is a crucial step in the recruitment process. A company on the search for qualified cadres cannot limit the job description to what it wishes to see in the candidate. Instead, there should be a balance between prerequisites and benefits for the potential employee when comparing Western multinational companies with regard to their recruiting strategies. Edwards, Sanchez-Mangas, Jalette, Lavelle, and Minbaeva (2016) notice that North American and North European countries lean heavily toward standardization. In particular, MNCs of today aim their job postings at a stereotypical Western millennial (Coffy et al., 2018).

Recent research shows that the youth entering the workforce seeks more than just a decent remuneration – if it is the only benefit that a company has to offer, younger employees do not think twice about “job-hopping.” Stewart et al. (2017) note that Zoomers and Millennials are drawn to social justice causes and personal growth. They want to make a positive impact on the organization that they are working for and help it to tackle social and environmental challenges (Stewart et al., 2017). Therefore, MNCs, especially tech giants such as Apple and Amazon, often stress individualism and the ability to contribute to their job listings.

However, the research by Andreassi, Lawter, Brockerhoff, and Rutigliano (2012) that covered 48 nations shows that different cultures look for different benefits in terms of career. For instance, collectivist cultures, such as Chinese or Japanese, view teamwork and collaboration above personal achievement. Andreassi et al. (2012) explain that for such cultures, contribution to the group matters more than individual contribution. Individualistic cultures concentrate more on what benefits the person, not the group. According to Andreassi et al. (2012), people in such cultures prioritize family and work-life balance. Countries in Latin America, Japan, and Germany score high in uncertainty avoidance, so they tend to adopt strict codes of behavior (Jang, Shen, Allen, & Zhang, 2018). Conversely, the US is an uncertain acceptance culture, which influences communication from the management (Jang et al., 2018). Because these aspects predict job satisfaction and, hence, retention, they should be communicated during the recruitment process.

Interviewing is a key recruitment practice that needs to be adjusted based on a host country’s cultural intangibles. Lim, Winter, and Chan (2006) opine that while managers are formally aware of cultural differences, they may be unprepared for handling them in real life. Using an example of the Canadian tourism and leisure industry, Garrick and Smith (2016) argue that when conducting interviews, human resources managers have to pay regards to cultural variables and let them inform not only verbal but also non-verbal communication. Discrete cultural variables include hierarchy, context, the role of pauses and silence, gestures, and stereotypes. In turn, specific variables are eye contact, voice tone, facial expressions, and choice of words (Garrick & Smith, 2016). Garrick and Smith (2016) provide an example of how neglecting cultural differences may lead to the misinterpretation of an interview’s profile and potential. In Western countries, such as Canada and the United States, eye contact is encouraged. In contrast, in Vietnam and China, an interviewee may avoid eye contact out of respect for hierarchy.

Further, Garrick and Smith (2016) explain that cultures can be roughly divided into low- and high-context. Cultures belonging to the former type are characterized by direct communication, verbality, and unrestrained expression of opinion. On the contrary, high-context cultures assign a special role assigned to non-verbal communication and unwritten rules. To illustrate how the type of culture may impact the recruitment process, Garrick and Smith (2016) compare American and Asian approaches to passing an interview. A candidate coming from a high-context Asian country may rely on body language and pauses to make their point. Moreover, it may be uncommon for such a person to continue speaking beyond what is asked. However, an American candidate used to the specifics of their low-context culture may use their verbality and ability to elaborate as their strong point and proof of confidence. It is readily imaginable how the parties could misinterpret each other’s behavior as either unusually imposing or not confident enough in one’s abilities. Therefore, without adjustment, HR practice transfer may as well prove ineffective and fail to attract suitable candidates.

The comparative institutional approach may also explain why recruitment processes should be localized. Ghotbi (2011) studied the activities of Western companies headquartered in the countries of Benelux, such as Unilever, in Iran. The researcher found that generally, the main recruitment steps (job posting, screening, interviewing) are similar in Iran and Belgium. However, there are certain differences in how these steps are completed (Ghotbi, 2011). For example, at the Belgian Unilever Office, 50% of personnel come from management trainees and graduate students. However, in Iran, Unilever cannot build the same pipeline as it does not have access to universities. Therefore, talent attraction has to be localized: most candidates are found either via word-of-mouth or on websites, such as Iran Talent and Job Agah websites. Unilever’s inability to hire from universities is an external hurdle. Therefore, working around social, legal, and bureaucratic issues require localization of HRM practices.

Nowadays, companies no longer hire from an existing pool of locals but rather look wider and search for suitable candidates globally. Another common scenario in the age of globalization is becoming a multinational corporation that has offices around the globe. Transfer of HR practices is understood through several approaches, out of which the cultural and the comparative institutional are the most relevant in the context of this paper. HR recruitment practices require localization because only attention to and respect for a foreign culture allows for pinpointing culture-specific job satisfaction factors that play a role in talent attraction. Culture variables, such as context, hierarchy, gestures, and facial expressions, impact the effectiveness of communication during the hiring process. From a comparative-institutional perspective, hiring practices established by the headquarters may face legal, social, and political hurdles in host countries. Therefore, MNCs should consider adjusting their HR practices to the realities of a new operating country while staying true to their core values.

Reference List

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