Effects of Globalization on Human Resource Management

by Sue-Lynn Carty ; Updated September 26, 2017

The human resources management of any company is an integral party of its success. Human resources management for a multi-national corporation with subsidiaries that operate in multiple countries presents many cultural and socio-economic challenges. Globalization has many positive and negative effects on any multi-national corporation’s human resources management department.

About Globalization

Globalization is a polarizing subject that is not easily defined. Globalization allows for increased competition, lifts barriers to entry for developing countries, helps to promote economic growth and works to unify the world’s economies. However, with this unification of economies, comes interdependence. Meaning, the negative events in major industrial nations such as the United States has a significant impact on the economies in other countries. In addition, the economic growth of one country can mean the economic contraction of another.


Globalization makes for a larger labor pool from which to choose, but it also increases the possibility of language and cultural barriers in the recruitment process. If the company does not address such barriers, it can make the recruitment process increasingly time-consuming and difficult. Human resource managers must adapt to the different customs and cultures when hiring employees in different countries. Language barriers also may necessitate hiring bilingual employees and adapting employee documents, such as employee manuals and training materials, into different languages.

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Labor Laws

Labor laws can differ greatly from one country to the next. With increasing globalization, human resources managers must stay abreast of the labor laws of the countries in which they operate to ensure that the company is not inadvertently breaking these laws. Additionally, human resource management should make certain that they are not taking advantage of labor laws that may be more lax in other countries than those in their native country. For example, child labor is illegal in the United States, but in different countries, this is not the case. Human resources management should implement hiring and training practices that are consistent for all countries in which the company operates.

Labor Force Implications

Globalization has a significant effect on the labor force of a company. It allows for more diversity within the corporation as well as economic growth for the countries in which the company is hiring. However, unless the corporation is creating new jobs in different countries and not simply moving existing jobs from one country to another, job growth for one country equals job losses for another. Human resources manager should be aware of the negative effect downsizing can have on employee morale because decreased morale often leads to decreased production. Human resources should have proactive procedures in place that address such morale issues.

About the Author

Sue-Lynn Carty has over five years experience as both a freelance writer and editor, and her work has appeared on the websites Work.com and LoveToKnow. Carty holds a Bachelor of Arts degree in business administration, with an emphasis on financial management, from Davenport University.

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