HRM 650 Ashford University Disadvantages of Hiring Internally Discussion
Discussion 1 Good Evening Everyone!For any business to continue to grow and not become idle and deteriorate, it will need to recruit and maintain creative, resourceful and imaginative individuals. Employees with fresh new ideas on how to handle issues and develop a better staff, will keep the organization renewed and active (Poppulo, 2019, February 20). Where to find these talented people will depend on the needs of the company and making sure they have the right candidate for the positions.Advantages & Disadvantages of hiring InternallyWhen a company makes the decision to hire or promote personnel internally, the company is getting an employee that has proven their abilities. Thus, it is no surprise or doubt as to what they can learn and accomplish. Also, this employee knows how the business works. They have usually already integrated into the corporation’s culture (Poppulo, 2019, February 20). Hiring an employee from within will be a lower hiring cost as well as their supervisors already know if this employee meets performance goals. It can be assumed that an internal employee will be ready to work, learn new things and have a desire to prove the choice of hiring them was the right one (Poppulo, 2019, February 20).However, with advantage to hiring internally there can also be disadvantages. To only hiring internally, the company is missing opportunities of having someone with new ideas, background and desire that could be needed to encourage and motivate others (Poppulo, 2019, February 20). Furthermore, when one internal employee is moved to another position, this leaves that employees position open. This still leaves the business without a full staff in a department. Also, when hiring from within, jealousy could be created when one person is chosen over another who may feel they were better suited for the job. And this could interrupt the departments workflow and performance (Poppulo, 2019, February 20). Advantages & disadvantages of Hiring ExternallyWhen the company makes the decision to hire personnel externally only this has its advantages and disadvantages as well. One of the biggest advantages when hiring someone new externally, they will have new ideas, accept challenges with a different mindset than an existing internal employee (Poppulo, 2019, February 20). When bringing on new talent from outside the business, new skillsets and knowledge of competitors will be added to the portfolio of the organization. This allows companies to continue to grow having renewed creativity and not just accept how things have been done is the best way to continue to do things (Poppulo, 2019, February 20).Although hiring externally has its advantages, when stepping outside the company for new talent will come with disadvantages. Hiring outside the company can cost more than hiring someone that already works at the company. The company may need to hire a third-party to assist in the hiring process in addition to the time and effort put forth by HR in sorting through applicants and interviewing them (Poppulo, 2019, February 20). When the hiring is done, the talent recruited may not last either they do not fit or unable to perform the job hired for. (Barcelos, 2019, January 22). This leaves the company to start over again.Selecting a Diverse WorkforceRegardless of hiring staff internally or externally making sure the talent that is hired is a diverse group is important. Having a diverse workforce will help with ideas and creativity. Different cultures and backgrounds will widen the scope of how issues and processes are looked at. Unfortunately, if a company only looks at race, gender, and age, for example, they could miss a wide range of talent and potentially hire someone who is not qualified or has the skill set to perform the job successfully (MacDonald, 2019, January 28).MacDonald explains that employing a diverse workforce will take training and support from the managers. The supervisors must understand the importance of supporting their teams and balancing the teams needs and respecting their opinions (2019). However, with open communication and a little work this is possible and having a diverse staff is achievable.Discussion 2Bringing people together from different disciplines, cultures, generations, and different experiences enable companies to perform better. As the global footprint expands, one of the essential talent tools organizations can use is cultural competence. Depending upon the region, a company may emphasize an individual’s career and growth instead of relationships between the employer and employee. Other countries believe group connections and long-term business goals are critical. The one common belief is seeing the value of diverse voices and respecting one's differences. This relates to all employment decisions over generations. Internationally, some companies share the views of the United States by maintaining hiring practices so all candidates, no matter age, have the ability to apply for open positions. Age or gender bias has no place in decision-making. According to Kerby (2012), when companies recruit from a diverse set of potential employees, they are more likely to hire the best and the brightest in the labor market". This strategy enables the global reach for recruiting the most diverse pool of talent. Acquiring talent from both internal and external sources does come with advantages and disadvantages. Advantages/Disadvantages of Internal Resources One of my work experiences was supporting a global consumer goods company. The talent acquisition team worked closely with the human resources partners to review top talent within the business. Bi-annually, a succession planning meeting, would take place to review bench talent across the globe. Critical considerations included skills, competencies, language, and mobility for each potential high performer at a senior manager level and above. Internal talent was essential for key leadership roles enabling employees to gain exposure to different cultures and products. Knowledge in diverse areas the business helps to understand the different customers’ needs and wants. Utilizing internal employees ensures that they are engaged and motivated regarding their future development. This is an advantage and benefit for both the employer and the employee. Harvey (2000) describes, "a successful global manager will have to possess a complex amalgamation of technical, functional, cultural, social, and political skills." Internal resources create continuity of leadership, sharing of knowledge, and demonstrating commitment to employee advancement. Employees can also quickly fill skill gaps within an organization instead of training and onboarding a new hire. The employee already knows the business model, which includes the company’s vision, mission, goals, and objectives. While valuable, internal resources can be quite costly. The disadvantages include relocation, personal allowances, tax considerations, potential family assistance, not to mention the time-consuming process of governmental visas applications. Harvey (2000) also points out, "leveraging a firm's internal resources across its global network requires competent boundary-spanning managers developed within the firm's SGHRM system." In addition to developing an expatriate program, managers experiencing overseas assignments and inpatriation can benefit managers coming to the home country. For example, leaders can network with their colleagues, build relationships, gain exposure to senior leadership, and experience the culture of headquarters first-hand. Advantages/Disadvantages of External Talent In comparison, selecting talent from external markets can be very valuable. Some organizations foster relationships with local universities. The talent pool is vast, with varying degrees and expertise in technology, communications, and engineering disciplines. These individuals bring much-needed innovation, an aptitude for learning and developing, and a fresh perspective instead of traditional thought processes to solve problems. These next-generation talents are also change agents for companies in a highly competitive labor market. According to Shotwell (2016), "the demand for high skilled labor is growing faster than supply." The demographics continue to shift with baby boomers retiring and a shrinking labor population for those early in careers. The challenge company’s face is that labor market has a different set of values and work expectations which companies may not be prepared to accommodate. Employers must create flexible work and benefit arrangements enabling work-life balance. The new generation is also concerned with working conditions, career advancement, and social responsibility. While the demand for skilled labor is growing, available talent is challenging due to competition. According to Maurer (2013), "the percentage of college-education professionals from the industrialized world is shrinking while it continues to grow in the emerging markets." One disadvantage to sourcing outside the company is the decline of skilled labor. This week's reading emphasized that staffing strategies depend on culture and the labor climate both in the home country and host regions. According to Thomas (2014), "as the cultural distance between headquarters and the foreign subsidiary increases so does the tendency to use expatriates." Expatriates bring consistency, empowerment to implement policies, and technical expertise because they are familiar with the organization. Inpatriates are also an advantage as can benefit from their assignments in the host country with knowledge shared and gained. In comparison, when a business decides to staff locally, a lack of talent becomes a concern with limited pool of applicants. While finding talent is challenging, best practices include providing all applicants the ability to grow within the organization. According to Gurchiek (2020), “focus on competencies required to perform the job” and avoid biases. Creating an inclusive environment that considers all generations with their diversity of thought and experiences. When hiring from within the region, companies acknowledge their social responsibility by creating stronger relationships within the community in which they reside. Ultimately, finding the right talent is driven by what works best with the organization's recruiting strategic approach.Discussion 3A total rewards program must reflect its workforces' needs to attract and retain talent. In a global organization, comprehensive strategies can be customized for the region in which they support. According to Miller (2019), "performance-rewarding strategies are appropriate for culturally diverse workforces of employees as well as outsiders." The systems need to be flexible and change with the demographics of its population. Programs also vary depending on if the culture promotes individual performance or team productivity. Rewards and incentives to help motivate performance are essential to driving the expected business results. Globally, team incentives are becoming increasingly relevant to increase profitability. Design systems with careful consideration of local legislation and tax implications to ensure the offerings are not illegal. Whether compensation is global or regional depends upon the organization's goals and objectives to conducting business. If the strategy is global, consistency is essential throughout its network with customized systems developed in each geographic region. This approach might compare to the United States in which pay equity laws establish a minimum hourly wage, but each state adjusts pay rates based on the cost of living. Other aspects impact the strategy for compensation and reward strategies. Thomas (2014) states, "cultural and institutional factors can have wide-ranging influences on performance management systems in terms of performance criteria or standards." Appraisals lead to different motivators, such as money, promotion, and career development. While companies view pay as a transaction, it is more personal to employees. Additionally, economic growth, inflation, and financial turbulence set the structure for increases, stock options, profit-sharing, and other rewards and incentives. International organizations have two different stances when it comes to compensation rewards and incentives. The global entity decides some compensation systems and, in other situations, is determined by the host or home country. According to Miller (2008), "eighty-four percent of companies has established a global compensation strategy for their executive-level employees, far fewer have done the same for other employee groups." These programs are designed at the local level according to cultural values. The Human Resources Department works closely with site leadership to implement programs. Foremost, reward programs must be created to increase performance and productivity. Whether it is short-term or long-term incentives, if they do not change behavior, communicate expectations, and manage performance, the program will not provide any value. There are a few best practices that ensure positive results. According to Sammer (2014), the following are essential."
"developing a clear, metric-based employee review process."
"establishing general bonus criteria before evaluating performance."
"ensuring that employees below performance criteria are ineligible."
"educating managers about how the plan works."
"making compensation decisions reviewed by upper management."
Below are examples of how countries differ in their compensation approach and focus on engaging applicants and the labor market:
France – Shepherd (2020) communicates, "under the new French law, the government will pay employers 4,000 euros for hiring a worker young than 26 years old." There are financial incentives for work-study students, apprenticeships, and professionals.
Asia – countries in the region such as China, India, Vietnam have a fixed pay structure, short-term and long-term incentives for its executives. Long-term incentives include stock options, performance shares, and target cash plans. In comparison, the percentages differ from western economies but have the same category structure. Executive retention is one key reason for their design.
Latin America – the economy has high inflation rates, with the government setting standards for compensation increases and variable pay programs. There is less focus on pay for performance and individual rewards.
It is essential to recognize that compensation programs also vary on the industry and products produced. Commissions are typical in retail organizations, bonuses in manufacturing environments, and incentive plans in technology businesses. The marketplace dictates the types of compensation offerings. According to Thomas (2014), "organizations, in their compensation practices as well as with other HRM structures and practices, are influenced by the extent to which these practices are seen as legitimate and acceptable in a society." Overall, the design plan should provide the appropriate rewards to incentivize employee performance and behaviors to boost productivity and competitiveness. Discussion 4It can be very demanding and taxing for a corporation to find the right mixture of rewards and incentives for their employees. This difficult task can either enhance worker performance or cause engagement and motivation to turn negative toward the company (Sammer, 2015). Sammer (2015) explains there is no need to confuse and distract employees with too many or too few choices on incentives and rewards. It is vital for employees to understand what the company goals are and what exactly is expected of them to reach those goals. This allows the staff to arrange their tasks in order of importance.A Company’s Reward & Incentive DecisionsThe right rewards and incentives implemented in the workplace will benefit the employer as well as the employee. When the employee is happy and satisfied with their work and is acknowledged for it, they are less likely to leave and are more engaged. The business will profit since the individual will work harder, be more productive and this will increase profits for the company (Scott, 2019).When the organization chooses rewards and incentives such as flexible work schedules or working remotely, employee recognition, training opportunities, and money incentives; as in bonuses or cash rewards, stock options, and competitive pay. These incentives and rewards will motivate individuals, improve employee morale, and motivation (Scott, 2019). Implementing such rewards will also build self-confidence and employees may have a sense of job security they never had before. When a firm takes care of their staff the employees are less likely to look for other positions with other companies since they are satisfied and content with their current company and position (Scott, 2019). When the incentives and rewards are appealing it assists during the hiring process since other applicants will want to work at the company due to their positive reputation. Opening the door to a larger talent pool of qualified applicants (Scott, 2019). However, different countries and cultures value different things and it is important to know what motivates employees in those places to maintain engaged and driven employees (Ingram, n.d.).Who Should Conduct Performance Reviews for a Global Company?Performance evaluations offer a company’s managers and employees the opportunity to work together through feedback, training, and joint goal setting (Ingram, n.d.). However, with a global organization, the key will be to make sure all incentives and rewards are reasonable and unbiased to remove any obstacles. Ingram (n.d.) defines this as setting global standards that transcend cultural nuances, utilizing local leaders to be a part of the performance evaluations, and specifying the actual procedures of evaluations. In other words, having the immediate supervisors of the employees oversee and administer the performance evaluation would be the most effective and efficient for the company. When possible using the face-to-face method for the performance evaluation is the first choice. If there is not a supervisor in-house at the global location, then a face-to-face remote performance review can be beneficial as well. Once HR has established the process and goals to be met by each department and position, having the resident manager or supervisor conduct the evaluation will be the strategic choice (Ingram, n.d.). The key to working this way is the resident manager has a better ability to evaluate their team since they work with them on a regular basis. This advantage allows the supervisor a better perspective on employee performance, skills, knowledge, and what may need improvement or praise.A good example of this would be my own evaluations. I flex between different tasks and jobs within my department. I have only one supervisor, but I work closely with a team lead that has a better grasp of my daily performance. However, since my supervisor can only evaluate me on little things I do in one job and the tasks at hand that come with that position, he does not understand totally how the other job within the global department works and spends more time guessing or not even evaluating my performance in this area. Still, if my supervisor would touch base with the team lead in the global position, I work in he would have a better picture of my performance, skills, and knowledge. Instead, he spends more time asking me questions about the tasks I perform with global rather than evaluate my process. At this point until the supervisor finds time to sit (virtually) with me and see the job I perform and how it is done, etc he will not truly be able to evaluate my overall performance and that does not benefit me or the company at all.