Question

Answer the following question in short essay form. Under what conditions should a multinational company localize its HR practices? What criteria should the multinational company use to determine which HR practices should be localized?

Answer 1

• Localization is a situation where a company adopts management practices used by domestic companies in the host country. Localization of HRM practices for an MNE(multinational enterprises) is driven by two factors namely institutional characteristics and cultural environment.
• Different nations have different cultures that affect the human resource management. Consequently, it may be possible to standardize the management of the human resource in all the nations and still maintain success in all the subsidiaries.
• Most of the employees working in foreign countries are likely to experience cultural challenges.As a result, most MNE would opt for localization of the HRM rather than standardization of the practices.
• Institutional characteristic also plays a major role in localization of the HRM. For instance, Canon is an MNE enterprise with its parent company in Japan. In this country, the company is structured on the traditional concept of seniority.
• However, the company’s subsidies in US tend to take goal-oriented structure which is different from the parent company in Japan. Consequently, the company is forced to localize most of the key functions of its subsidiary’s operations.
• HRM is one of the key functions, and the practice is also localized to avoid challenges that may result from standardization of the HRM practices
• Localization of HRM practices has numerous advantages. First, localization helps a company to develop new network links in the host country. Localization means that competent local managers replace expatriates in top management positions. These managers have the knowledge of the small local businesses in the host country.
• Therefore, the local managers are in a better position to develop ties with the local businesses hence building networks for the company.
• The second advantage of the localization of HRM is that it creates a good image for the MNE.Most local people feel comfortable and would prefer to see local people been in charge of the operations of MNE in their country.
• An organization creates a good image when it replace expatriate with local managers who take the management position of the subsidiaries in the host country.
• Due to time limit,remaining can be asked as another question,they will be answered,thankyou for your cooperation