Introduction to The Global Challenge

A look at the history of international business shows that balancing what is global and what is local - as Netflix is attempting - has always been a challenge for multinational organizations. While changes in technology and other elements of the global context of business impact how multinational organizations are managed, certain key questions are constant: How can we build on the existing strengths of a company when going abroad but also be responsive to local needs? How do we control and coordinate diverse units and people across the world as well as capturing the advantages of the international operations of the firm? In this chapter we first explore the challenges companies face as they internationalize. We then address the question of how people management - or “Human Resource Management” (HRM) - adds value in international firms, arguing that HRM can best contribute to firm performance when people management practices support the organizational capabilities necessary for the firm to compete. We review the domain, represented by a People Management Wheel, highlighting its guiding principles, core people management practices, and desired outcomes. We conclude that while the HR professionals have the functional responsibility, people management must be part of the key responsibilities of line managers and top executives, while employees need to take responsibility for their own career development. The reader should note that in this book we use “people management” and “HRM” as synonyms, while ‘HR’ refers to the ‘Human Resources’ function of the organization.