International Human Resource Strategy: Comparative Analysis

International Human Resource Strategy: Comparative Analysis
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“International Human Resource Strategy: Comparative Analysis”
1.0. Introduction and Background
1.1. Introduction of the Chosen Company
Founded in 1962, Walmart has its headquarters in the US and is one of the largest global retail chains. The Company deals in a wide range of products, including grocery, apparel, electronics, and accessories. Since its inception, the Company’s focus has been to target cost-sensitive customers with its “everyday low price” formula. The Company has operations in 24 countries worldwide (Summaries, 2022).
1.2. Chosen Locations, Scenario, and Purpose
This report focuses on the Company’s plan to develop its production facilities in Heredia, Costa Rica, and Choloma, Honduras. Walmart will likely rely heavily on local talent for the aforementioned production facilities. The purpose of this study is to conduct a comparative analysis of these two locations by focusing on vital contextual factors relevant to the external environment and prospectively having an impact on the Company’s strategic approach to human resource management. Based on insights gleaned from the comparative analysis, the Company is given appropriate recommendations regarding talent management, retention, training, and other vital aspects of HR management in each chosen region.
2.0. Comparative Analysis and International Human Resource Strategy
Some of the key contextual factors considered for the analysis are as follows:
2.1. Political Factors
Costa Rica and Honduras are at the divergence in terms of politics. The political risk in Costa Rica remains low since the country takes pride in democratic values, and each succeeding ruling setup has to go through the due course in a predictable manner (Allianz Trade, 2022a). On the other hand, Honduras has a history stained with recurring military invasions and anarchies. While considering the short-term scenario, the country has a democratic party elected and is looking to restore political stability. However, the conflict within the ruling party over congressional leadership erodes these hopes, affecting its strength to legislate and bring in reform policies (Allianz Trade, 2022b). The differences in terms of political stability are also shown in the figure below:
Figure SEQ Figure \* ARABIC 1:
Costa Rica versus Honduras on Political Risk
(Allianz Trade, 2022a; Allianz Trade, 2022b)
Keeping the above in view, it is important to note that Walmart has to make more adjustments to its HR policies and practices in Choloma than in Heredia. High political risk in Honduras marks a high level of uncertainty. Therefore, it is hard to attract expatriate talent to the production facility in Choloma. Expatriates may feel reluctant to relocate to Choloma since low political instability, and the underlying risks are likely to make them feel unsafe and insecure (Duarte et al., 2020). Therefore, it is essential to focus on filling the positions by hiring local talent.
Furthermore, the Company will also have to be careful regarding its employment contracts. At the same time, it is safe to use long-term contracts for labour in Heredia since political stability is likely to ensure the continuity of the government’s policies towards HRM, such as wage laws and others (Dowling et al., 2013). However, Walmart may have to adopt a more flexible approach towards employment contracts in Choloma to be able to make appropriate adjustments in the event of policy changes in the future. For example, any succeeding setup may obligate the businesses to pay considerably higher minimum wages and legislate for other employee-oriented policies, forcing the businesses to engage in layoffs to keep these changes from affecting the operational costs (Dowling et al., 2013). Therefore, entering into short-term contracts with employees is more viable, which may come at the expanse of employee retention rate but insulates Walmart from the greater risks.
2.2. Economic Factors
One of the critical areas to consider from an economic perspective is the unemployment rate in any region since it helps HR professionals assess the demand for labour to inform the policies relating to wage and employee benefits (Dowling et al., 2013). The comparison of unemployment rates in the chosen countries is provided below:
Figure SEQ Figure \* ARABIC 2:
Costa Rica versus Honduras: Unemployment Rate
(Trading Economics, 2023)
As shown in the figure, Costa Rica is grappling with a much higher unemployment rate than Honduras, peaking at 24% in 2020 and recorded at 12% in 2022. On the other hand, despite the massive increase in the past two years, presumably under the influence of the pandemic, the unemployment rate in Honduras remains at 8%.
The higher unemployment rate in Costa Rica allows Walmart to keep wages comparatively lower in Heredia compared to Choloma, where demand for labour is relatively higher. However, before finalizing this recommendation, it is also essential to consider the income levels in each country. Despite having a slight edge on employment rates, Honduras is well behind Costa Rica in average income. According to the most recent findings, the annual income in Costa Rica averages above $12,000, while it remains slightly above $2000 in Honduras (World Data, 2023). Similarly, the report by the World Bank shows that more than 16% of the population in Honduras remains below the international poverty line with an income below $2 per day, which is the second highest rate in Latin American Regions and the Caribbean (World Bank, 2020).
Above findings imply that the weight of the massive difference in average income potentially outweighs Honduras’ slight advantage in terms of employment rates. Therefore, Walmart, it is assumed that labour will be available at much lower rates in Choloma than in Heredia. For determining the payscales for its production facility, the Company can also consider the estimates of comparative average annual wages within production and manufacturing facilities found at $34887 in Costa Rica and $9296 in Honduras (Salary Explorer, 2023a; Salary Explorer, 2023b). This difference also encourages Walmart to keep the salaries lower in Choloma than for workers for similar ranks in Heredia.
2.3. Languages
The share of the population familiar with English in the chosen cities is crucial since it determines the extent to which the expatriate managers will be able to interact smoothly with the workers. Similarly, it also helps determine the extent to which the relevant target audience will get reduced if English proficiency is included in the eligibility criteria (Dowling et al., 2013). Both the chosen countries have a Spanish-speaking majority, with Spanish being their native language. There is a stark contrast between Costa Rica and Honduras on the dimension of English proficiency. According to recent reports, Costa Rica is one of the most English-friendly countries, with 38% of the population being familiar with English and varying proficiency levels (Williams, 2022). While high English proficiency is attributable to Costa Rica; being dotted with touristic destinations, it is essential to note that Heredia has no relevance for tourism. However, a considerable population in Heredia can speak and understand English (Williams, 2022).
On the other hand, Honduras is among the regions with the lowest English proficiency in Latin America (Bryfonski, 2021). Hence, native languages, primarily Spanish, are the source of communication.
Keeping the above information in view, it is notable that Walmart should ideally rely on local talent for all positions from top to bottom for its production facilities in Honduras. Even though an option is to consider expatriates for managerial positions proficient in Spanish, it is not viable considering the lack of political stability in the country (as also discussed earlier). Furthermore, relying on English-speaking managerial staff and looking for local employees with high proficiency in English will critically narrow down the scope of the relevance. Therefore, Walmart should ideally recruit local candidates for managerial positions, so they can smoothly interact with locally hired employees.
However, all potential options are open for Walmart for Heredia. The option of looking for English-speaking candidates is less viable since Heredia is not a touristic destination and, despite having a decent number of English speakers, may not be consistent with the national average (38%+). Therefore, it is important not to include English proficiency in the eligibility criteria in strict terms but use it as a preferential. However, Walmart can rely on expatriates for higher ranks in management if so is desired since the labour is likely to characterize a good mix of English speakers. Therefore,...