INTERNATIONAL HUMAN

RESOURCE MANAGEMENT
 Human Resource Management

• Human Resource Management (HRM)

involves all management decisions and
practices that directly affect the people who
work for the organization.
• Human Resources the people who work for the
organization.
 What is IHRM?

• International HRM (IHRM) is the process

of:
– procuring,
– allocating, and
– effectively utilizing human resources
– in a multinational corporation, while
– balancing the integration and differentiation of
HR activities in foreign locations.
 What is IHRM?
• IHRM is performing HRM and its related
activities and arranging for related and
necessary immigration facilities for
prospective and current expatriate
employees,by organizations operating in
domestic and/or foreign countries
 OBJECTIVES of IHRM

• To reduce the risk of

international human resource
• To avoid cultural risks
• To avoid regional disparities
• To manage diversifies human
capital
MAJOR DIMENSIONS OF IHRM

Wider
Nationality
Different approaches Broader
For the Functions Relationship&
Complexities

IHRM

Influence of
Variety of international
Functions environment
Enduring complexities
of
HRM activities
 Three Approaches to IHRM
• Cross-cultural management
– Examine human behavior within organizations
from an international perspective

• Comparative HRM and Industrial Relations

– Seeks to describe, compare and analyze HRM
systems and IR in different countries

• HRM in multinational firms

– Explore how HRM is practiced in multinationals
Interrelationships between
Approaches to the Field
 STAGES OF
INTERNATIONALISATION
• Stage I- Domestic Company
• Stage II- International Company
• Stage III- Multinational Company
• Stage IV-Global Company
• Stage V- Transnational Company
Strategies of international, multinational,
global & transnationals organizations
• International company – transports its
business outside home country; each of its
operations is a replication of the
company's domestic experience;
structured geographically. It focus on
domestic practices,but extend the wings to
foreign countries.
Strategies of international, multinational,
global & transnational organizations
• Multinational company (MNC)– grows and
defines its business on a worldwide basis, but
continues to allocate its resources among
national or regional areas to maximize the total. It
formulates different strategies for different
markets.Ex- TOYOTA
Strategies of international, multinational,
global & transnational organizations
• Global organizations – treat the entire world as
though it were one large country. Global companies
either produce in one country and market globally or
produce globally and market domestically.
Ex-DR.REDDY’S LAB
Strategies of international, multinational,
global & transnational organizations
• Transnational organization(TNC) - Use
specialized facilities to permit local responsiveness;
more complex coordination mechanism to provide global
integration. Such companies produces, markets,invest
and operates across the world.
• EX-BOEING AIRCRAFTS.
Global efficiency and local responsiveness
of different types of firms

High

Global Global Transnational

efficiency
International Multinational
Low Local responsiveness High
What does IHRM add into the Traditional
Framework of HRM?
• Types of employees
– Within and cross-cultural workforce diversity
– Coordination
– Communication
• Human resource activities
– Procurement
– Allocation
– Utilization of human resources
• Nation/country categories where firms
expand and operate
– Host country
– Parent country
– Third country
A Model of IHRM
 Categories of employees in an MNE
• Parent-country nationals
(PCNs) 
– Employees who were born and
live in a parent country.
• A parent (or home) country: the
country in which a company’s
corporate headquarters is located.
 Categories of employees in an MNE

• Host-country nationals (HCNs) 

– Employees born and raised in a
host country.
• Host country: a country in which the
subsidiary or branch of an MNC is
located.
• Third-country nationals (TCNs) 
– Employees born in a country other
than a parent or host country.
 What is an expatriate and inpatriates?

 The term expatriate from the point of view of IHRM is the one
who is working and residing in the foreign country during his/her
tenure of foreign employment.

 Expatriate are all types of foreigners.

 Inpatriates are those HCN’s transferred to headquarters of MNC.

International Assignments Create
Expatriates
 Reasons for Expatriate Failure
1. Inability of spouse to adjust
2. Manager’s inability to adjust
3. Other family problems
4. Manager’s personal or emotional maturity
5. Inability to cope with larger overseas
responsibility
6. Lack of technical competence
7. Difficulties with new environment
Why IHRM

?
Factors that Influence the Global Work Environment
 FACTORS INFLUENCING
INTERNATIONAL BUSINESS
• To achieve higher rates of profits.
• Expanding the production capacities beyond the demand
of Domestic Country.
• Severe competition in the home country.
• Limited home market
• Availability of quality HR at less cost.
• Nearness to raw-material
• To increase market share
• Liberalisation & Globalisation
 Advantages of International Business
• High standard of living
• Increase socio-economic welfare
• Wider markets
• Reduced risks
• Large-scale economies
• Economic growth of the world.
• Cultural transformation.
• Division of labor and specialisation.
 Differences between Domestic HRM and IHRM
 More HR activities: taxation, culture orientation,
administrative services
 The need for a broader perspective: cater to multiple
needs
 More involvement in employees’ personal lives:
adjustment, spouses, children
 Changes in emphasis as the workforce mix of expatriates
and locals varies.
 Risk exposure: expatriate failure, terrorism
 Broader external influences: government regulations,
ways of conduct
 Differences between Domestic HRM and
IHRM: variables

• Complexity involved in operating in different

countries, varied nationalities of employees
• The different Cultural Environment
• The industry or industries with which the MNC is
involved
• Attitudes of Senior Management
• Extent of reliance of MNC on home country domestic
market
Variables that Moderate Differences between
Domestic HR and IHRM
 Qualities of Global Managers

• Understand the worldwide business

• Learn about many cultures
• Work with many types of people
• Create cultural synergy
• Adapt to living in many cultures
• Use cross-cultural skills daily
• Treat foreign colleagues as equals
• Use foreign assignments as career development
 The need for a broader
perspective

Greater involvement in the

New HR responsibilities Employees’ personal lives

Complexity of Global
Human
Resource Management

Managing the mix of

External influences of
expatriates
Nation and culture
And locals

Great Risk exposure

 Main challenges in IHRM
• High failure rates of expatriation and repatriation
• Deployment – getting the right mix of skills in the
organization regardless of geographical location
• Knowledge and innovation dissemination – managing
critical knowledge and speed of information flow
• Talent identification and development – identify capable
people who are able to function effectively
• Barriers to women in IHRM
• International ethics
• Language (e.g. spoken, written, body)
 Main challenges in IHRM
• Different labour laws
• Different political climate
• Different stage(s) of technological advancement
• Different values and attitudes e.g. time, achievement,
risk taking
• Roles of religion e.g. sacred objects, prayer, taboos,
holidays, etc
• Educational level attained
• Social organizations e.g. social institutions, authority
structures, interest groups, status systems
 Whirlpool’s Globalization

• Where to go among alternative markets?

– $23/hr in the U.S. including the benefits
– $3/hr in Mexico
– $1/hr in China
– $32/hr in Germany
• Mode of entry?
– Acquisition of Phillips N.V. for more than $1 billion in 1991
• Whirlpool’s total employees today:
– 23,000 in the U.S.
– 45,000 overseas
 Whirlpools Global Network
• The high-end $1,200 model from
Germany
– The smaller front loaders from Mexico
• Mexican engineers, foremen and supervisors had
18 months training in Germany
– Top loading machines made in Ohio for
Americans
• Microwave ovens engineered in Sweden
and made in China
• Refrigerators assembled in Brazil and
exported to Europe
EQUAL EMPLOYEE OPPORTUNITY

• Equal Employment
Opportunities (EEO)
means eliminating barriers
to ensure that all
employees are considered
for the employment of their
choice and have the chance
to perform to their
maximum potential.
 OBJECTIVES
• To promote recognition and acceptance of everyone's
right to equality of opportunity
• TO eliminate, as far as possible, discrimination
against people by prohibiting discrimination on the
basis of various attributes
• TO eliminate, as far as possible, sexual harassment
• TO provide redress for people who have been
discriminated against or sexually harassed.
EQUAL EMPLOYEE OPPORTUNITY

Discrimination on the basis of:-

• Disability
• Race
• Age
• Minority
• Marital status
Equal employment opportunity act is implemented by
many countries to stop these discriminations.
Global Area Division
Multinational Matrix Structure
Transnational Network Structures
 CULTURAL SHOCK

The cultural shock refers to a situation in which an

expatriate is unable to adjust emotionally to a new
cultural environment in which he or she is expected to
work.Some typical manifestation of a cultural shock are-
• Psychological disorientation
• Negative feeling for the host country and its people.
• Strong desire to return to one’s own country.
Thank you!!!