HRM 7610 Module 2 Written Assignment: Structuring HR for a Growing Multinational Example

From Export Department to Global Company: Structuring HR at Lenape Surgical

Student Name

MBA in Human Resource Management, Thomas Edison State University

HRM-7610: Human Resource Management in the 21st Century Global Workplace

Mentor Name

Month Day, Year

From Export Department to Global Company: Structuring HR at Lenape Surgical

Introduction

Lenape Surgical began exporting surgical instruments in the 1990s through distributors. It opened a sales subsidiary in Germany in 2006, a manufacturing plant in Cork, Ireland, in 2012 and a sales subsidiary in Tokyo in 2018, and it plans a manufacturing plant in Mexico. It now employs about 1,800 people, 600 of them outside the United States. Its HR function has grown piece by piece, with each subsidiary hiring its own HR staff and headquarters HR focused on the United States. This assignment examines how its structure has evolved and how HR should be organized for the next stage.

Stages of Internationalization

Dowling et al. (2013) describe a typical path of internationalization in which a firm moves from exporting to sales subsidiaries, then to international divisions and eventually to global structures organized by product, region or a matrix. Each stage changes what the HR function must do. In the export stage, HR's international role is minimal. With sales subsidiaries, HR must staff and pay a small number of people abroad, often expatriates. With manufacturing abroad, HR faces local labor law, unions and large workforces. In a global structure, HR must coordinate policies across countries while respecting local differences.

Control Mechanisms

A multinational must coordinate and control its subsidiaries. Harzing (2001) described three roles that expatriates play in control: as "bears," exercising direct control; as "bumble-bees," spreading shared culture and informal networks across units; and as "spiders," building communication networks. She found that firms use expatriates for different control roles depending on the subsidiary's situation, and that control through expatriates is one of several mechanisms alongside formal systems and socialization.

Lenape has relied on direct control through expatriates. Its German and Japanese subsidiaries were each started by an American manager sent from headquarters. This worked in the early years, but expatriates are expensive, their assignments end and local employees can see them as outsiders. As the company grows, it will need more control through formal systems, such as common performance management and reporting, and through shared culture, built by moving managers among locations in both directions.

Standardization and Localization

Every HR policy at a multinational sits somewhere between global standardization and local adaptation. Lenape should standardize where consistency serves the business and law allows: its code of conduct, its leadership competencies, its performance management cycle and its approach to safety. It should localize where law, labor markets and culture differ: pay levels, benefits, working time, union relations and recruitment methods. The German subsidiary must work with a works council on many personnel matters, and the Mexican plant will operate under the labor law reforms of 2019, so policies designed for New Jersey cannot simply be exported. Bartlett and Ghoshal (1989) described the transnational firm as one that pursues global integration and local responsiveness at the same time, which is the balance Lenape's HR function now needs.

Recommendation: A Global HR Structure

Lenape should replace its piecemeal arrangement with a small global HR center at headquarters and local HR partners in each country. The global center would own the standardized policies, leadership development, global mobility and HR data. Local partners would manage local law, pay, hiring and employee relations, reporting to both the local general manager and the global HR leader. Before the Mexican plant opens, the company should appoint a local HR manager with experience in Mexican labor law, supported by a global HR specialist for the start-up period. Moving high-potential managers from Ireland, Germany and Japan to headquarters, and from headquarters to subsidiaries, would build the shared culture that reduces the need for direct control.

Conclusion

Lenape's HR function has grown by accident with the company. The stages of internationalization explain why its challenges have changed, and research on control mechanisms shows why reliance on expatriates should give way to systems and shared culture. A global HR center with local partners would let the company standardize what matters and adapt what must change, as it enters its largest expansion.

References

Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders: The transnational solution. Harvard Business School Press.

Dowling, P. J., Festing, M., & Engle, A. D. (2013). International human resource management (6th ed.). Cengage Learning EMEA.

Harzing, A.-W. (2001). Of bears, bumble-bees, and spiders: The role of expatriates in controlling foreign subsidiaries. Journal of World Business, 36(4), 366-379. https://doi.org/10.1016/S1090-9516(01)00061-X