Assignment Example: IHRM Challenges

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Executive Summary

The report focuses on the critical HRM challenges that can be potentially encountered by Lizda Corporation, a US-based MNC during the establishment of its subsidiary in Norway. In the US, the company recruits and selects candidates based on individual benchmarks due to the individualistic culture using digital platforms. However, the strategic direction in Norway requires higher transparency and clarifying employee benefits like work-life balance for cultural integration through local inputs. Also, the US scenario of employee training and development represents the company policy of improving worker competencies through online courses; but in Norway, the firm must consider the culture of employee flexibility and low achievement motivation for integrating collaborative learning and knowledge-sharing programs by partnering with educational institutions.

Reward management in the US includes a competitive salary structure, fringe benefits like ESOP and pension plans. However, the IHRM strategy in the subsidiary requires a differentiated decentralised strategy for intangible benefits like flexibility, work-life balance and a dual reward system at individual and group levels to accommodate Scandinavian norms and employee union expectations.

1. Introduction

Human resource management (HRM) is a vital organisational function involving the recruitment and deployment of workers along with managing their performance to contribute to the organisational gains while utilising them efficiently as resources and maximizing returns (Bratton and Gold, 2017).

However, in the international context, HRM requires dedicated functional skills related to cultural empathy and strategic thinking for considering the local cultural and institutional aspects for improving analytical decisions and influencing the international workforce (Armstrong and Taylor, 2020). This considers the case study of Lizda Corporation, a US-based MNC specializing in the production, sales and management of electric vehicle (EV) charging stations intending to establish a subsidiary in Norway due to the growing market (Qadir et al., 2024).

Figure 1: Incremental EV Fleet in Norway from 2010 to 2022. (Source: Qadir et al., 2024).

The report focuses on the critical HRM challenges that can be potentially encountered by the organisation during the establishment of its subsidiary in Norway. This is due to the similarities and differences in the cultural and institutional factors like labour laws and cultural aspects across the home country and target country. Integration and differentiation are distinct aspects of the HRM approach within organisations wherein, the former includes teams pursuing their goals distinctly while the latter indicates the redirection of diverse employees towards a common cause (Reiche et al., 2019). Hofstede’s country comparison tool is used to identify the different values of the cultural dimensions of Norway and the US for guiding the strategic HRM approaches (Hofstede-Insights, 2024). The report specifically investigates the right HRM approach for the organisation while managing its international subsidiary, extending the discussion to the HRM areas of recruitment, and selection, training and development, and reward management.

Figure 2: Hofstede’s country comparison – Norway and the US. (Source: Hofstede-Insights, 2024).

2. Recruitment and selection

2.1 Present Practices in the US Context

Recruitment and selection are foundational aspects of HRM across organisations, providing the integral intangible component for the execution of business tasks for attaining the ultimate goals and objectives (Bach and Edwards, 2013). Recruitment is important for identifying and filling vacant positions in the workforce for effective utilisation for work completion whereas selection is important for ensuring the identification of the right workers fitting the purpose of the organisation or the required work designation (Brewster et al., 2021).

At present, Lizda, due to operating in the US focuses on the individual attainments like competencies and credentials of the workers due to its individualistic culture. The US scores 60 individualist aspects of Hofstede’s cultural dimension (Hofstede-Insights, 2024). However, the motivation towards achievement and success being 62 in the country drives a highly competitive process of hiring (Hofstede, 1984). This often includes the use of digital platforms for recruitment through networking sites like LinkedIn and employment portals, wherein data-driven tools like AI are used for screening and selecting candidates. This also prompts the use of behavioural assessment and technology, innovation-based competency-driven questions during one-to-one interviews for final selection at Lizda.

2.2 Norwegian Cultural and Institutional Considerations

In Norway, Hofstede’s cultural dimensions indicate a very low score of motivation towards achievement and success (8), indicating the absolute separation of personal and professional lives with employees focusing on independence and work-life balance (Hofstede-Insights, 2024). In Norway, the institutional considerations include a focus on equality among the workers during recruitment and maintaining flat management hierarchies due to the low power distance index (31), prompting the allotment of equal rights.

In this regard, the employees and potential recruits expect full engagement and communication for providing their consensus regarding the job role and positions with collective agreements. This resembles an egalitarian cultural society requiring distinctive considerations for upholding informal communication among employees and managers without strict control (Holand, 2023).

2.3 Opportunities and Challenges

Lizda’s HRM opportunities in Norway include the potential for leveraging the competencies of the existing individually skilled workers to bring disruptive transformations in the EV charging sector. The opportunities extend towards attracting highly qualified and capable workers by offering work-life balance and providing them equally participative opportunities in strategic business decisions (Reiche et al., 2017).

However, the challenging aspects of recruitment and selection will include the transition towards an egalitarian culture from the hierarchical US-centric practices with rigid job positions. Also, the individual achievement orientation in Norway has to be accommodated with a more collective focus for overall organisational progress. In addition, the prevalence of worker unions and rights bodies in Norway including government policies might be difficult to incorporate in hiring as a transition from the existing US-based approaches.

2.4 Strategic HRM Direction

Lizda’s strategic HRM directions for recruitment and selection include the prospective integration strategy for incorporating inclusive elements motivated by the egalitarian cultural and institutional values in Norway. The lower power distance in the country (31) also advocates the optimisation of transparency in the entire recruitment and selection practices while remaining consistent with the motive of recruitment and the organisational purpose (Trompenaars and Hampden-Turner, 2012). Also, the form needs to improve its employer branding and attractiveness for talent attraction with work-life balance and individual benefits as a key feature while establishing local alliances and partnerships for improving cultural integration in the entire process.

3. Training and Development

3.1 Present Practices in the US Context

Training and development are important for improving the skills, adaptability and resilience of the workers, enabling them to adapt to the changing work demands and sectoral developments while assuring personal and professional development (Edwards and Rees, 2017). The HRM practice is beneficial for the workers to acquire new skills and improve their employability credentials, whereas the employers benefit from loyal and competent workers capable of solving increasingly complex problems (Daniels et al., 2019).

Lizda’s present training focus on workers includes targeted career advancement and promotion opportunities due to the individualistic considerations and expectations from the employers. The higher motivation towards achievement in the US propels the present HRM training strategy of competitive skill development for the workers in the US. However, this is confined towards short and medium terms will acquisition due to the low long-term orientation (50) and focus on quick results. Hence, small workshops and online self-directed learning programs are also used for employee skill development and continuous training attainment.

3.2 Norwegian Cultural and Institutional Considerations

The long-term orientation focus in Norway is also low but comparatively higher than in the US (55). This indicates the situational and context-dependent attitude towards training and development-related investments in the workers. This puts forward the scope for continuous competency development and training for promoting the culture of lifelong learning depending upon the situational context of the high-tech sector (Hill, 2019).

The extreme individualist focus (81) in Norway highlights the importance of self and personal opinions applicable to contract-based learning inputs whereas the extremely low motivation for achievement highlights the need for knowledge sharing and social solidarity (Hofstede-Insights, 2024). This is supported by the higher long-term orientation than the US (55) and intermediate indulgence (55). However, the individualistic training and development support agenda is also propagated by the government policies regarding personnel training while integrating flexibility and employee welfare in the training programs. Free time and employee flexibility are highly favourable in Norway due to low success motivation and achievement orientation (Hudson, 2021). The cultural aspect emphasises worker wellbeing, without the public display of support, requiring supportive managers who use participative styles for employee work decisions.

3.3 Opportunities and Challenges

Lizda Corporation has the opportunity to integrate the continuous learning and knowledge-sharing culture in Norway highlighted through the individual aspirations for knowledge development and government-induced certainty. However, collaborative learning opportunities are important for improving the motivation for achievement among workers while clarifying their gains in the personal and professional domains (Marchington, 2021).

This also poses some challenges for the tech company to establish an equilibrium between individual career aspirations and collective team goals within the company (Stor, 2023). The challenges also include the integration of changes in training content development and material delivery for showcasing the Scandinavian, more specifically Norwegian cultural values of individual identity and independence.

The aspect of employee freedom and flexibility is a major consideration during training decisions as the workers cannot be held up for additional time with the pretext of training. Additionally, it is important to compensate them simultaneously as they participate in training for contributing towards organisational learning, creating a challenge in the financial aspect of managing productivity with learning (Brewster et al., 2021).

3.4 Strategic HRM Direction

Lizda, for accommodating the training requirements of the workers in its Norwegian subsidiary requires the formulation of long-term career planning assistance programs by involving the employees. This not only compliments the higher long-term orientation score than the US but also justifies the balance of low power distance, high individual aspirations and slightly higher uncertainty avoidance.

The integration aspects of HRM include the prospect of mentorship programs initiated by leaders for knowledge sharing and collective team development in the subsidiary. Also, the IHRM strategy optimisation requires training and development focuses with the constant work-life balance indicating paid training within the normal working hours (Thomas and Lazarova, 2013). Hence, if the employees are subjected to training on a specific day or weekend, they have to be provided compensatory leave or relief from work for the time they were dedicated to training. The only differentiation in this regard includes the collaboration with higher educational institutions and technology research bodies for high-quality employee development for preparing the workers regarding the potential disruptions in the sector (De Anca and Vazquez, 2007).

4. Reward Management

4.1 Present Practices in the US Context

Reward management in HRM is the process of providing employee incentives either due to contractual agreements or based on their performance for a meeting or exceeding their individual and or organisational goals (Morrison, 2011). Rewards can be extrinsic or intrinsic in HRM indicating the use of financial incentives like cash or stock payments like Employee Stock Ownership Plans (ESOPs) or recognition and promotion-related offerings indicating greater autonomy (Hudson, 2021).

In the US, the highly achievement-oriented culture propagates the administration of performance-based incentives as an extrinsic approach to reward management. In this aspect, the salary structure and packages are designed competitively against market rivals for attracting top talent and ensuring employee satisfaction. The prevalence of individualism in the US culture also influences the practice of individual recognition based on performance and benefits packages like employer health insurance and retirement benefits. This includes the Employee Retirement Income Security Act (ERISA) in some states and the universal 401(k) plan for tax-deferred savings pensions for workers (Hudson, 2021).

Figure 3: ESOP beneficiaries in the US. (Source: Hudson, 2021).

4.2 Norwegian Cultural and Institutional Considerations

Despite the individualistic aspirations in Norwegian society, the strong presence of employee unions and worker welfare advocate groups demands collective bargaining in employment and reward-related compensation agreements (Svarstad and Kostøl, 2022). The low power distance (31) in the country resonates with the establishment of equitable payment and benefits to the workers with that of the leaders and supervisors depending on effort and contribution (Hofstede-Insights, 2024). Hence, there cannot be stark differences in the payment packages for the bottom-level workers and the top-level management.

Additionally, the employer, Lizda Corporation has to contribute its part within the larger state-provided benefits that include pension, maternity leave, insurance and overtime payment. It is also important to comply with the government directors of supplementary health insurance and flexible leave opportunities with additional compensated leaves. In this regard, there is a need for establishing a balance between monetary and intangible rewards like work-life balance and personal space (Blandhol et al., 2020) as evidenced by the low motivation towards achievement (8).

4.3 Opportunities and Challenges

Deriving from the above analysis of the present practices of Lizda corporation and the Norwegian considerations, the organisation has the opportunity to differentiate its HRM initiative for emphasising the non-monetary aspects of rewards in its HRM system. This includes a dedicated focus on employee autonomy and freedom outside the workplace with total respect for their privacy and personal lives.

The tech organisation has the opportunity to leverage the existing employee welfare framework of the Norwegian Government and labour unions for offering unique employee value propositions with innovative and dynamic benefits according to situational needs like parenthood and healthcare. However, the existing performance-based compensation and bonus system of the US can be difficult to apply in Norway requiring differentiation for establishing basic remuneration standards for equality and holistic egalitarian expectations.

Adopting the local Scandinavian norms could be initially difficult for the HRM professionals of the organisation as they might need to reformulate the global compensation schemes and plans (Weedon, 2004).

4.4 Strategic HRM Direction

As stated earlier, the strategic HRM operating protocols of the US-based tech corporation need to be differentiated to improve transparency in employee rewards and compensations. This is important for reflecting the equitable pay structures and employee value orientation across all levels from the bottom line to the top management as they are regarded for their capabilities and efforts, without solely being judged due to their designations (Armstrong and Taylor, 2020). This is justified considering the low power distance yet individualistic attributes in the Norwegian workforce (Hofstede-Insights, 2024).

Additionally, the low motivation towards achievement in the subsidiary country requires the HRM differentiation for formulating a dynamic and team-oriented reward system as an add-on to the existing individual incentive program. This strategy is important for establishing decentralization concerning the management of its subsidiary by managing individual employee compensations without hampering the organisational performance prospects (Brewster et al., 2016). Additionally, dedicated focus is required in the domain of employee welfare and benefits due to worker expectations, government norms and unions.

This includes providing flexible working opportunities according to employee requirements and focusing on intangible rewards like recognition and employee autonomy along with paid vacations. Holistically, the strategic direction of the organisation can be optimised for achieving compliance with the union’s demands for entering into collective bargaining agreements (Edwards and Rees, 2017). This is important for improving brand attractiveness as an employer and achieving loyalty and retention without hampering market competitiveness.

5. Conclusion

From the report, it is concluded that Lizda Corporation, based in the US has to balance its HRM strategies and its pursuit of establishing a subsidiary in Norway. The organisation encounters recruitment selection, and reward management challenges due to an egalitarian and low achievement motivation in Norway compared to the US. Also, the training and development challenges while establishing its subsidiary include focusing on collective company goals along with individual development while preserving employee work-life balance.

The scope of integration in HRM includes greater transparency in recruitment and selection. Whereas, the differentiation aspects include individual mentorship programs for employee development, financial compensation for training with additional paid vacations and intangible dynamic benefits like insurance and healthcare in Norway.

6. References

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Blandhol, C., Mogstad, M., Nilsson, P. and Vestad, O.L. (2020)Do employees benefit from worker representation on corporate boards?(No. w28269). National Bureau of Economic Research. Available at: https://www.nber.org/papers/w28269

Bratton, J. and Gold, J. (Eds.) (2017). Human Resource Management: Theory and Practice. Sixth Edition. London: Red Globe Press.

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Daniels, J.D., Radebaugh, L.H. and Sullivan, D.P. (2019). International Business: Environments and Operations. Sixteenth Edition. Harlow: Pearson.

De Anca, C. and Vazquez, A. (2007). Managing Diversity in the Global Organization: Creating New Business Values. Hampshire: Palgrave Macmillan.

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Hudson, C. (2021)Employee Ownership and Moral Hazard: How Broad-Based Equity Sharing Can Lower Agency Costs and Reduce Inequality(Master’s thesis, University of Denver). Available at: https://www.proquest.com/openview/27bd0a57acb6478b9f13ca3bb3ff6e5b/1?pq-origsite=gscholar&cbl=18750&diss=y

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Reiche, B. S., Harzing, A-W., and Tenzer, H. (Eds.) (2019) International Human Resource Management. Fifth Edition. London: SAGE Publications Limited.

Svarstad, E. and Kostøl, F.B. (2022) Unions, collective agreements and productivity: A firm‐level analysis using Norwegian matched employer–employee panel data.British Journal of Industrial Relations,60(4), pp.864-894. https://doi.org/10.1111/bjir.12662

Thomas, D.C. and Lazarova, M. B. (2013). Essentials of International Human Resource Management: Managing People Globally. London: SAGE Publications

Trompenaars, F. and Hampden-Turner, C. (2012). Riding the Waves of Culture: Understanding Diversity in Global Business. Third Edition. London: Nicholas Brealey Publishing.

Weedon, C. (2004). Identity and Culture. Maidenhead: Open University Press.

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