1 Introduction and Background of Aerosafe Aircraft
The competitiveness of multinational business lies in their ability to deploy management capabilities and resource in multiple nations. These firms operate in more than one location and thus are exposed to differences in institutional environment, which makes it harder for them to adapt to diversity of institutional environment (Welch & Björkman, 2015). Among such challenges, the management of international human resources is one of the significant issues which require substantial consideration of management. The study of Adler & Ghadar (2012) has mentioned that expatriate management (workforce that works outside of home country) is highly challenging for contemporary globalized businesses as they need consideration to international cultures and management of diversity in multicultural workforces. One significant instance of organizations that is facing issues of international human resource management is of Aerosafe.
Aerosafe Aircraft is an Australian business specialized in manufacturing, production and selling of aircrafts. The company’s headquarter is in Australia and it operates in three international locations through subsidiaries, including; China, Vietnam and Singapore. Mainly, the aircraft design and construction takes place in Australia and Singapore, while the components of aircrafts are manufactured in China and Vietnam. Although, Aerosafe has become one of prestigious companies in its region, yet it has recently witnessed a decline in its revenue. This decline in revenue is partly based on the issues related to human resource management which is substantially affecting the performance of the organization and thus contributes in declining revenue of the company.
Throughout the report various issues have been highlighted that the company is going through, issues such as negative work environment, not having proper support from management or other members in the team is very demotivating and affecting the overall company performance. Another major issue is the discrimination that the company has when it comes to recruitment of disable people. The discrimination is rooted in the HR practices which stems to overall organization and poisons the whole working environment. Along with this, another major issue that the company face is not offering proper adequate training to its staff, only half a day training is provided to new staff members, which is not enough.
As a consultant to HRM, it is important that the organization takes it issues seriously and should and must address to such issues. In order to be able to address these issues the company has to come up with an action plan that should and must resolve the issues, such as high performance work culture needs to be maintained throughout the organization. Apart from that, cultural diversity needs to be promoted throughout the company. Proper induction and training practices has to take place within different departments of the organization as well. Further, organization should redesign its diversity policy along with adopting fair recruitment and selection procedures and promoting organization wide values of diversity.
2 International Human Resource Management at Aerosafe
International Human Resource Management (IHRM) is one of the essential areas of the organizations that shapes the sustainable performance of the organization in long-run. Based on the resource based view of the organization, competitiveness of human resources is one of the strategic sources of sustainable competitive advantage of organization (Al Ariss & Sidani, 2016). The reflection from the case of Aerosafe has highlighted that there are many issues within organization which pertain to its culture, workforce diversity management, international performance management and training and development.
2.1 Cultural Issues
It is mentioned by Briscoe, Schuler & Tarique (2012) that healthy and positive work culture is one of the key reasons behind effective performance of the organizations, as spirit of team work, coordination and communication stem from positive working culture. However, in case of Aerosafe, the working culture is highly negative and workforce is not willing to work with their full potential. The working environment is based on intonation of “Near enough is good enough”, which is affecting the quality of aircraft parts being manufactured by the company. The communication breakdown is witnessed within organization, which makes it harder for teams to maintain coordination and across team integration is lacking. The teams are not supporting each other, which affects the overall performance of the organization. This insight clarifies that culture of negativity prevails within organization and teamwork spirit is not realized.
2.2 Diversity Management issues
Diversity and inclusion are linked with having appreciation towards cultural, ethnic, language, religious and other differences among individuals. Effective diversity management is based on the practices which guarantee absence of discrimination and encourages people to work in harmony (Yang & Konrad, 2011). The case organization although has defined diversity policy which is simplified to offer respectful treatment to all individuals. However, in case of Aerosafe the organization has discriminatory recruitment processes, whereby people with disability are not hired. For instance, in Aerosafe there prevails strained working environment where senior members in Headquarter are not willing to work with people from different generations. Likewise, working with apprentices is also not tolerated. This working behavior has emerged in whole organization and there is no harmony among workforce. The lack of interaction is making it hard to understand the values of others and to show respect to the differences of people from diverse cultures. Being an internationally working organization, such attitude can not only hurt the public reputation of organization, but lack of harmony in workforce is also leading to lacking performance of organization.
2.3 International Performance Management Issues
Among the culturally and institutionally sensitive HR practices, the performance management is of huge importance (Van Dooren, 2011). Aerosafe is operating beyond national boundaries, yet it lacks in management of international performance appraisal. The context of cultural difference, institutional differences and other contextual factors that can affect performance beyond national borders are completely ignored (Slavić, Berber & Leković, 2014)). The same performance standards and behavioral standards are used to assess performance of each subsidiary and performance appraisal takes place in Australia. It indicates that Aerosafe fails to effectively assess the performance of its international divisions and thus without effective tracking it cannot reach the desired performance standards. This issues results in conflicting performance outcomes and lack of planning on performance improvement, which is visibly affecting the overall quality of Aerosafe and company is lacking in terms of its performance.
2.4 Training and Development Issues
The expatriate training is one the key precursor of assuring organizational success overseas (Budhwar & Debrah, 2009). However, Aerosafe lacks in terms of effective training and development of its expatriate workforce. For instance, only half a day training is provided to employees, which is assumed to fit the needs of all employees. The workforce is given the online resources and there is no provision of feedback mechanism. The lack of effective training makes it hard for workers to adjust in cross cultural working environment and it contributes in affecting the workplace harmony and teamwork. Finally, Aerosafe lacks in terms of systematic workforce planning and management development. The organization does not utilize its management development and career development plans which shows that there is no succession planning within Aerosafe. Additionally, the lack of consideration to career development of employees leads to turnover of qualified workers as they are head hunted by other organizations (Dartey-Baah, 2013). Therefore, lack of training and development can lead to talent drain for the organization in long run.
3 How should HRM deal with the issues at Aerosafe?
In the context of multinational organization, human resource management has larger responsibilities to manage workforce in the context of internationalized work environment (Fan, Zhang & Zhu, 2013). Aerosafe has clearly failed to align its human resource management practices with the context of internationalized workplace, which has caused many issues in its workforce management. The core aspect to be considered by Aerosafe is the fact that it operates in multiple external environment, whereby having different social, economic, political as well as legislative institutional forces, which calls upon for localization of human resource management approaches. The key factor that is considerable for IHRM of Aerosafe is linked with the fact that organization is dealing with diverse nationalities having different diverse cultural orientation, whereby integration of HRM practices across whole organization requires huge consideration (Fenton-O'Creevy, Gooderham & Nordhaug, 2008).
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In order for Aerosafe’s human resource management to deal with its current issues, the IHRM of the organization needs to find an effective mix of standardization and localization of HR practices. The standardization refers to the adoption of isomorphic HR practices in each country, regardless of the local cultural orientation and diverse values of workforce (Furusawa & Brewster, 2016). On the other hand, localization or adaptation is linked with consideration of local differentiation in adoption of HR practices (Shen et al., 2015). In case of Aerosafe, the organization needs to keep some of its aspect standardized while others should be adapted to the local context. For instance, the existing issues with culture of organization are something that needs isomorphic consideration across all subsidiaries of the organization. Organization needs to transform its workplace culture to make it high performing, whereby a strong strategy of continuous performance improvement guides the practices of organization (Sabharwal, 2014). The strong leadership is the key in this regard, whereby O’Meara (CEO of Aerosafe) needs to guide the cultural change through by defining and articulating a compelling vision of ‘high performance work culture’ across the whole organization. This culture does not have to consider the context of localization as high performance work values, team spirit and desire to work at the full potential are mainly common across all high performing organizations (regardless of their national context) (Pokharel, 2016). Therefore, the issue of culture at Aerosafe can be resolved by making reliance on a unified approach of cultural transformation in all subsidiaries of the company.
Additionally, the issue of diversity and inclusion also needs some common practices across the whole organization, whereby organization needs to establish sense of belonging among whole workforce, regardless of their ethnic and cultural differences. It is noted by McDonnell, Stanton & Burgess (2011) that when organizations treat all of their employees fairly and offer support for teamwork and coordination, then there is likely to be more harmony among workforce. This harmony can be generated by embracing the diversity and inclusion practically across whole organization and by role modeling the values of diversity in organizational policies and procedures, such as recruitment and selection (Lucio, 2013). Again, this aspect does not need local consideration as equal and fair treatment is needed to promote diversity and inclusion.
On the other hand, the issues of international performance management and training and development at Aerosafe require greater adaptation and localization. Specifically, the international performance management is highly culturally bound, whereby the differences in culture can generate greater sensitivity among employees regarding the appraisal system (Jehanzeb & Bashir, 2013). For instance, in high power distance countries, appraisal is mainly driven by managers whereby they evaluate performance of employees while in low power distance countries employees have greater say and voice through self-evaluation and multi-source evaluations (Haak-Saheem, Festing & Darwish, 2017). Such differences can make it harder for Aerosafe to generate perceptions of fairness in performance management, if they apply standardized practices in all subsidiaries. On the other hand, the training of expatriates also needs adaptation based on unique context of the country in which they are to be transferred (Jehanzeb & Bashir, 2013). Lastly, the professional development pathways also become effective when local institutional factors are considered to plan such programs (Harzing & Pinnington, 2010). These evidences indicate that by transforming the culture of organization and by finding an effective mix of standardization and localization in its HRM practices, Aerosafe, management can avoid such issues in future.
1 Recommendations and Implementation Plan
In order to eliminate the HR issues from Aerosafe, management needs to take immediate action, by following the subsequent recommendations.
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Issues at Aerosafe
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Recommendations
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Action Plan
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Negative culture
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· Aerosafe needs to undergo cultural transformation
· The implementation of high performance work culture is recommended
· Consideration of team work and coordination is needed
· There should be open communication between teams and across teams
· Employees should be properly guided on elimination of quality related issues
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In order to transform the culture of organization, Aerosafe needs to create a compelling vision of high performance work culture that should be communicated to all employees throughout the organization. The following change management process can be followed by Aerosafe to transform its existing culture to high performance work culture;
1. Create a sense of urgency to change the existing culture of organization
2. Build guiding teams to plan on the transformation of culture
3. Develop the vision for high performance work culture
4. Communicate this vision to generate buy-in
5. Address any barriers and remove them
6. Create short-term wins
7. Sustain change
8. Institute change
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Lack of diversity and inclusion
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· Aerosafe needs to develop diversity and inclusion policy that not only states the values of diversity by engages the whole organizations to live with those values
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First step in the promotion of diversity with Aerosafe is linked with rectification of organizational procedures. The discrimination should be eliminated altogether starting from recruitment and selection.
1. Fair recruitment and selection
2. Employees should be hired based on qualification and skills rather than considering their background, gender or physical characteristics.
3. Justice procedures are to be aligned with employees’ treatment
4. Anti-discrimination and ati-bullying policy should be developed to allow all employees to complain against unfair treatment
5. Finally, communicate diversity and inclusion and educate employees on their rights and responsibilities regarding diversity and inclusion
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Lack of international performance management
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· Aerosafe needs to adopt localized or adaptable international performance management system
· The performance appraisal of subsidiaries should incorporate local context and it ad hoc performance assessment conducted in Australia should not be followed
· The subsidiary based performance planning should stem from differentiated locally fit performance management
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In order to implement performance management system for each subsidiary, a clear performance management policy should be developed by Aerosafe.
There should be differentiated performance and behavioral standards for employees in each subsidiary, to be based on contextual and cultural factors. These standards should be set based on formal goal setting phase.
Followed by this, employee should be communicated about these standards beforehand, by offering any initial assistance if needed.
The performance should be appraised by relying on three key evaluation methods; evaluation by supervisor/manager, multi-source evaluation and self-evaluation.
The continuous performance related feedback should be provided to employees, such that performance gaps are identified and improvement can be guided.
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Ineffective training
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· Aerosafe needs to make reliance on effective expatriate training
· Expatriates should be well informed about the local working environment, local context and cultural values that are held in the host country
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Aerosafe can implement two expatriate training methods;
1. Cultural awareness training
2. Didactic training
The first one can be implemented through role playing activities and self-assessment exercises. The cultural awareness training is likely to help employees to adjust in subsidiaries and thus they can work effectively in new environment.
Secondly, the didactic training can be delivered through classical learning exercises whereby employees are to be provided with factual information about the host country and host subsidiary.
These trainings can combine to prepare employees for working in new culture. However, in order to assure effectiveness of any of these training exercises, it is important to offer guidance and feedback to employees in new workplace.
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Non-compliance with development programs
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· Aerosafe should enhance its reliance on management development programs, such that succession planning can be supported well within organization
· Employees’ should be offered developmental opportunities and they should be offered a systematic career path to keep them motivated and engaged
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The development of management and employees can be carried out by making reliance on the following cycle;
1. Plan
2. Design
3. Implement
4. Measure
The reliance on this cycle will allow Aerosafe to continually assess the effectiveness of its management and employee development programs, such that any discrepancy can be addressed in timely manner.
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2 Conclusion
Aerosafe is experiencing the issues with its culture, diversity management, international performance management and training and development. These issues are substantially affecting the quality and performance of company, causing losses to the company and affecting its reputation among clients. In order to address these issues, IHRM of Aerosafe needs to find an effective mix between standardization and adaptation, such that local contexts and cultural factors can be considered in managing its international workforce. It is recommended that Aerosafe should transform its culture to implement high performance work culture.. Moreover, reliance on localized international performance management system is recommended. Finally, formal expatriate training and management and employee development programs should be implemented in Aerosafe.
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