What are the major challenges of International HRM in 2022?
The ongoing COVID-19 pandemic, Brexit and other seismic global disruptions continue to rock the world of international HR, forcing organisations and HR experts alike to respond and rethink all HR elements.
In this article, we explore the challenges of International HRM in 2022 and how HR professionals can overcome them.
1. Staff shortages
Businesses worldwide are still grappling with the global staff shortage with millions of vacancies left unfilled despite high unemployment levels. Although reasons for the shortage vary between geographies, many cite the changing expectations of would-be employees following the pandemic, along with country-specific policy changes.
In the UK for example, resourcing teams are feeling the effects of Brexit as far fewer overseas workers are willing or able to travel to Britain due to the new immigration rules.
Although the migrant labour shortage is impacting all sectors, it’s most keenly felt across organisations in transportation, hospitality, retail, and construction, where EU workers had previously filled a high volume of roles.
The global skills shortage poses another headache for recruiters as employers increasingly struggle to find candidates with the expertise needed to meet the changing demands of the labour market. McKinsey’s recent global survey on future workforce needs revealed that 43% of companies have skills gaps now, with data analytics identified as the business area with the greatest need to address potential skill gaps.
International HR professionals will therefore need to strategise new ways to both attract new talent with the requisite skills and to retrain and upskill current employees in order to futureproof their business.
2. Failed expatriate assignments
According to a recent survey by advisory firm Willis Towers Watson, 31% of multinationals plan to send staff on international assignments in 2022, meaning international HR teams will have their work cut out recruiting, onboarding, and supporting new overseas employees.
While this investment offers huge benefits for businesses looking to take advantage of the global economy, it also comes with significant risk as expatriate failure rates remain high. Allianz Global has reported on research by INSEAD that indicates failure rates span 10% to 50%, with expats sent to emerging economies experiencing higher rates of failure than those relocating to developed countries.
As common reasons for failure include culture shock, isolation, and domestic issues (e.g., children or spouses struggling to settle in the host country), international HR managers must devise a comprehensive expatriate strategy that mitigates these problems.
Solutions might include devising a candidate selection process that prioritises those with a global mindset, organising relevant cross-cultural and local market training, and implementing a support system for employees while they’re abroad, as well as paying attention to the repatriation process – a neglected yet invaluable aspect of the expatriation experience.
3. Localisation vs. standardisation of HR practices
One of the biggest issues facing multinational corporations is the tension between standardisation versus localisation. And for HR professionals, this means trying to strike a balance between promoting global values while recognising the need to adapt certain HR practices and policies to local markets, cultures, and institutions.
Let’s take employee benefits as an example. While policies like shared parental leave might be viewed favourably in some cultures, in others where men are unlikely to take it, it wouldn’t make sense to offer this as a ‘perk’. International HR teams might therefore wish to tailor benefits packages per country in line with local market norms.
With globalisation on the rise across industries, HR professionals should develop a deep understanding of the unique cultural attitudes, practices, and legal frameworks across countries to design practices and policies that support subsidiaries and employees in the host countries.
4. Ethical challenges in multinational corporations
Linked to the localisation versus standardisation dilemma, establishing and maintaining one overarching ethical code across various jurisdictions remains one of the key challenges of International HRM.
We know organisations with strong ethical track records are viewed as desirable places to work (and increasingly so by millennial and Gen-Z generations). Promoting a global code of conduct and set of values is therefore an important strategy to attract and retain talent.
However, there can often be conflicts between the ethics of the parent company in one country and the laws and practices of the host countries. For example, while western companies have stringent laws against the use of child labour, they might also have factories in countries overseas where this is permitted.
International HR managers must therefore work with senior leaders to define an organisation’s ethical code and consider how to promote consistent behavioural standards across international offices irrespective of varying laws.
5. The evolution of digital HRM
Digital HR, including digital platforms, tools, and cloud-based technologies, is increasingly used to automate daily processes and acquire data to create predictive models for better strategic decision-making.
While there are numerous benefits to the rise of digital HR, including increased productivity and efficiency, it can also pose several challenges to HR line managers who must engage with these systems, as well as the workers.
Perhaps most obviously, increased automation raises the eventual likelihood of job losses for those in administrative roles. HR departments must therefore consider the role of technology in shaping the future of work and aim to upskill or retrain employees to avoid redundancies.
In addition, the skills shortage we’ve touched on affects HR as well, with businesses increasingly struggling to find people with the relevant expertise needed to interpret and make strategic use of the data gathered.
Finally, international HR professionals must find a way to accurately measure HR metrics across different countries. After all, what may be understood as employee engagement in one culture could be entirely different in another. An ability to scrutinise and interpret data through varying cultural lenses is therefore highly important for those reporting through digital platforms.
How to take on the challenges of international HRM
If you’re working in HRM, you’ll likely know some of the challenges outlined here all too well. Those still unknown to you might impact your ways of working in the not-too-distant future. In order to develop effective solutions to these complex issues, additional training, access to the latest research, and insights from real-world case studies could help you build the career toolkit you need.
Manchester Metropolitan University’s online International Human Resource Management masters has been designed to arm HR professionals with the knowledge and skills necessary to navigate the contemporary challenges of International HRM and manage a global workforce.
The CIPD-accredited course, delivered from Manchester Met’s triple accredited business school, will also offer the chance to:
- Network with HR professionals around the world
- Hear from expatriates themselves and learn from their experiences
- Explore case studies from multinational corporations facing the challenges highlighted
- Learn about best practices for coaching, employee engagement, HR reporting and more.
For more information, visit Manchester Met’s online International Human Resource Management masters page.