Role of HR Strategy for

Business Performance
–
An International
Perspective
Group 6

• Pallavi Singh – 77
• Shray Taneja – 89
• Shivika Bansal – 98
• Kunal Shukla – 110
• Shankar Gupta – 112
• Nirav Kansariwala - 120
 Agenda
• What is International Human Resource Management?
• Basic vs. International Strategic Process.
• Factors Affecting International HRM
• International Recruitment Policy
• International Selection Criteria
• International Training and Development
• Performance appraisal
• International Compensation
• International Labor Relations
• Future of IHRM
 International Human Resource
Management
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
Basic Strategic Process
Strategic International HRM Model
 International Business Strategy
• These are the set of strategic choices that a
firm might make to determine its entry into
international business and its evolution in
pursuit of international business objectives
• E.g. :- Portfolio investment, partial ownership,
export, contract/subcontract , international
joint venture, alliances, partnerships, franchise
and consortia, etc.
 Types Of HR Employees
• Host Country Nationals (HCNs) – They are
employees from the local population
• Parent Country Nationals (PCNs) – They are
employees sent from the parent country also
called Expatriates.
• Third Country Nationals (TCNs) – They are
employees neither from the host nor the
parent company.
 HR Policy and Practice
• Three areas of core HR responsibility presented in
figure include:
• Procurement (recruit, select, acquire the best possible
talent; align, partner, orient, train, develop, assign).
• Management (compensate, set expectations, manage
performance, monitor and enhance health and safety,
employee relations, information systems).
• Out processing (retirement, layoff, termination,
downsize, divestiture).
Factors Affecting International HRM
Political

Legal IHRM Economic

Cultural
 Political and Legal Factors
• Differences between countries and their
political and legal institutions create differences
in their HRM strategies
• If the political & legal systems are well-
established, global firms can depend on
continuity and consistency
• Business contracts become unenforceable
because of instability in internal political & legal
factors
 Economic Factors
• Different countries have different economic
systems
• Nations with weak economies may not be able
to invest in maintaining and upgrading the
necessary elements of their infrastructures
• Cost of living is a major economic
consideration
• Tax structure of the country
 Cultural Factors
• Culture is composed of the societal forces
affecting the values, beliefs, and actions of a
distinct group of people
• Getting individuals from different ethnic or
tribal backgrounds working together may be
difficult in some parts of the world
• Culture can lead to ethical differences among
countries
 Cultural Factors
Dimensions to measure culture:
• Power distance
• Collectivism versus individualism
• Uncertainty avoidance
• Femininity versus masculinity
 International Recruitment Policy
The key strategic issue in these orientations is
the degree of domination of the MNE
headquarters over subsidiary management

• Ethnocentrism
• Key management positions filled by parent-
country nationals
• Best suited for international businesses
 International Recruitment Policy
• Polycentric -
• Host-country nationals manage subsidiaries
• Parent companies nationals hold key
headquarter positions
• Best suited to multi-domestic businesses
 International Recruitment Policy
• Geocentric-
• Seek best people, regardless of nationality
• Best suited to global and trans-national
businesses
 International Selection Policy
• Employment for managerial positions in foreign
subsidiaries place heavy emphasis on the use of
EXPATRIATES, i.e., an employee who is working and
temporarily residing in a foreign country
• They are PCNs from the parent country operations,
TCNs transferred to either HQ or another subsidiary,
and HCNs transferred into the parent country
• They are transferred as they help in transfer
technology to a foreign operation, developing
managers with global perspectives, worldwide
organizational culture, etc
International Training & Development
• Improved job knowledge and skills at all levels of
the organization
• Improved morale of the human resource
• Improved profitability and more positive
attitudes towards profit-orientation
• Improved relation between boss and
subordinated
• Improved understanding of culture of various
countries
 Performance Appraisal
Problems:
• Unintentional bias –
• Host-nation biased because of cultural differences
• Home-country biased by distance and lack of
experience working abroad
• Expatriate managers believe that headquarters
unfairly evaluates and under appreciates them
• Personnel managers of U.S. multinationals stated
that foreign assignment are either detrimental or
immaterial to one’s career
Guidelines for Performance Appraisal
• More weight should be given to onsite manager’s
evaluation as they are able to recognize the soft
variables

• Expatriate who worked in same location should assist

home-office manager with evaluation

• If foreign on-site managers prepare an evaluation,

home-office manager should be consulted before
completion of formal the terminal evaluation
 International Compensation
Expatriate pay should be equal to what he is
getting at home. Thus Expat’s pay
• Is mostly based on the balance sheet
approach so that they are able to maintain the
same standard of living
• Includes allowances like car allowances
• Involves Profit Sharing & ESOP
 International Labor Relations
• Degree to which organized labor can limit the
choices of an international business
• Aims to foster harmony and minimize conflicts
between firms and organized labor
 International Labor Relations
• Concerns –
• Multinational can counter union bargaining
power with threats to move production to
another country
• Multinational will keep highly skilled tasks in
its home country and farm out only low-skilled
tasks to foreign plants
 International Labor Relations
• Strategy
• Attempts to establish international labor
organizations
• Attempts to achieve international regulations
on multinationals through such organizations
as the United Nations
 Future Of IHRM
• Development of global unions and global
bargaining
• Global payroll/compensation options
• Global employment companies
• Evolving international labor standards and ethics
• Increasing attention to global crisis management
• Focus on developing a global learning
organization
THANK YOU