Effect on Human Resource by Globalization

(UTSA, 2020)

With the boom of world economy in early 1980s, many new companies started to emerge. Competition led to think about cheap labour and economies of scale. Movement of labour, production, knowledge etc were inevitable to achieve the economies of scale. Thus, companies tried to attract labour (eg: cheap, skilled, semi-skilled etc) from other countries or outsourced/subcontracted the production to a cheap labour market.

Outsourcing or subcontracting is not always easy. Sometimes, even the brand name could be affected by the actions of subcontracted/outsourced party. Below is an example of how an American company, Nike, got affected by the labour issue in its subcontracted manufacturing plant in Indonesia.

In the early 1990s, Nike products were being manufactured in several Indonesian factories. Some of the factories were manged by Nike’s Korean suppliers. These factories came under greater scrutiny for labour exploitation, poor working conditions, low salary etc. Plight of these poor workers exposed to American media. Initially, managers at Nike ignored these criticisms by arguing that the Indonesian factories were not owned and operated by them, but by the independent subcontractors. Due to the pressure from many stakeholders, ultimately, Nike instructed subcontractors to raise the wages and improve the working conditions (Locke, 2002).

Another issue faced mainly by companies situated in developing countries is “Globalization of human capital”, which is different to “brain drain”. Globalization of human capital mainly related to Skill migration (Khadria, 2000) which can be further divided into professionals and students (who will become professionals in future) (Khadria, 2001). This migration may due to the lack of job opportunities, career development, salary, job satisfaction etc in the home country.

Global companies require movement of international personnel, especially in manufacturing and service-oriented companies. This includes recruiting non-citizen and moving current employees internationally for both short and long-term assignments. These companies make decisions for global operations of their business believing that their employees could be able to travel to most of the world to perform the assigned duties (Keely, 2003).

Eg: Training facilitator should be able to travel to any country to deliver the required training.

Finally, globalization introduces many new challenges to the company. Some of them are unpredictable and uncontrollable. It is also vital keep common corporate culture, HRM practices etc throughout its offices and it is HR’s responsibility to manage them efficiently and effectively.

References

Keely, C. (2003) ‘Globalization Transforms Trade-Migration Equation’, International Migration, 4(1), pp. 87-92.

Khadria, B. (2001) ‘Shifting paradigms of globalization: the twenty‐first century transition towards generics in skilled migration from India’, International Migration, 39(5), pp. 45-71.

Locke, R. (2002) The Promise and Perils of Globalization: The Case of Nike. Industrial Performance center, MIT.

UTSA (2020) Overseas Jobs. Available at: https://careercenter.utsa.edu/resources/overseasjobs-com/ (Accessed: 01/07/2020).