China and international human resource management of Nestl Essay

China and international human resource management of Nestl - Essay Example Human resources are essential to the organizational success. Human Resource (HR) management deals with the design of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals.A multinational enterprise is one in which organizational units are located in foreign countries. Typically these units provide goods and services for the geographic areas surrounding the countries where operations exist. Today's increasingly global, competitive marketplace has led to considerable changes in labour markets, and has transformed the practice of Human Resource Management. All Multinational enterprises face a range of challenges in managing their businesses in a country like China, which restraint, prohibit or limit market access and ownership rights. Nestl is the multi-national enterprise selected for the purpose of this study. The changes Nestl had to implement in its International Human Resource policies to start a subsidiary in China are discussed upon in the following sections.China has one of the world's oldest civilizations, consisting of states and cultures dating back more than six millennia. It is a communist country, where state-owned enterprises still produce about one-third of the country's GNP and so government has more direct influence on corporate strategy in China (Dessler, G., 2006). According to Dessler, G. (2006), the existing human capital pool in China is influenced by the following factors: Government influence- The government's 'Iron Rice Bowl' approach consisted of practices including lifetime employment, cradle to grave welfare coverage, no layoffs/firing policies, government based pay systems, and group based rewards. It restricted the entry of unemployed into the cities through the 'Hukuo' registration system that severely restricts labour mobility. The government also insisted on the personnel file system which requires employees to transfer their government-administered personnel files to new employers before changing jobs. The Cultural Revolution- This revolution largely lowered and belittled formal university education, closing down universities and schools. Shortage of labour- The problem is that most of China's new jobs are and will be in or near cities, while most of the labour force is still in rural areas. China is therefore undergoing one of the largest human migrations in history. Shortages are not confined to professional and managerial personnel. Global competition- The managers in China face an intensely competitive global industrial environment. Whether expanding into or out of China, the challenge in globalization is competing with world-class businesses in their own markets. Therefore efficient Human Resource management is the key to success in China. A multinational enterprise like Nestl has to make certain changes in its international human resource management policies to survive in China. Nestl Nestl is a multinational packaged food company founded and headquartered in Vevey, Switzerland (Nestl, 2008). It was started in 1905 by Henri Nestl to provide an infant food product. Nestl has a wide range of products across a number of markets including coffee, water, other beverages, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food. The company has set up factories locally, employed personnel from the country concerned and relies on indigenous raw materials in many countries. Nestl has a subsidiary in China. After 13 years of talks, Nestl was formally invited into Shuangcheng, China in 1987, by the Government of Heilongjiang province. There are various differences between the two countries which are discussed in the following section