Human Resource Management Advantages And Disadvantages

1. Introduction

General Definition: Human Resource Management is the process of procuring, allocating, and effectively utilizing human resources in a corporation.

IHRM has been defined as ‘the HRM issues and problems arising from the internationalization of business, and the HRM strategies, policies and practices which firms pursue in response to the internationalization of business’ (Scullion, 1995). Welch (1994) concluded that international HRM was essentially concerned with the four core activities of recruitment and selection, training and development, compensation and repatriation of expatriates. It is suggested that as a firm passes through the various stages of the internationalization process, the approach to international staffing

PCNs, HCNs and TCNs: Advantages and Dis-advantages

Some of the most frequently mentioned advantages and disadvantages (Negandhi, 1987; Phatak, 1989; Dowling, Festing, & Engle, 2008) are summarized in the table below

Table showing Advantages and disadvantages of using PCNs, HCNs or TCNs:

Advantages Disadvantages

PCNs

Parent

country nationals • familiarity with the home office 's goals, objectives, policies and practices

• technical and managerial competence

• effective liaison and communication with home-office personnel

• easier exercise of control over the subsidiary 's operations • difficulties in adapting to the foreign language and the socioeconomic, political, cultural and legal environment

• excessive cost of selecting, training and maintaining expatriate managers and their families abroad

• the host countries ' insistence on localizing operations and on promoting local nationals in top positions at foreign subsidiaries

• family adjustment problems, especially concerning the unemployed partners of managers

HCNs

Host

country nationals • familiarity with the socioeconomic, political and legal environment and with business practices in the host country

• lower cost incurred in hiring them as compared to PCN

Managers are expected to be experts in their fields and generally are selected based on seniority (Hofstede, 1980, 2001).

HQ managers might not trust the information they receive from local managers. Additionally, HQ managers might fear that local managers are less committed to the company. However, Gong (2003a) found that the reliance on PCNs in cases of high cultural distance weakens over time, suggesting that the longer the presence of the MNC in the host country, the trust relationships with HCNs increases and thus lesser PCNs are deployed.

The communication between people from different cultural backgrounds can be very difficult (even if they speak the same language) and the opportunity for misunderstanding is usually high (Marschan-Piekkari & Welch, 1999). Therefore, HQ managers will prefer to have at least some home country managers in important positions to facilitate the