An Introduction to International Human Resource Management

Why International Human Resource Management? 

Increasing globalization, firms and employees in them moving all over the world.  Major problems in international operations because of human resource management blunders  Hence need to understand human resource management in a global perspective

Why International Human Resource Management? (cont¶d) 

The role of HR in International Operations  Managing a Multicultural Workforce  Developing Managerial Talent in a Global Business Environment


Uncertainty. Complexity and IHRM Globalization and New Technologies New Environment ± Increased Environmental Uncertainty More Complexity More Dynamism Less Richness 1±4 .Globalization.

Globalization and importance of IHRM Uncertainty. Roles and Integration for Global Performance HR Capabilities People Processes Persons in Roles 1±5 . Complexity. Hypercompetition Need to Refocus on Persons.

Three Approaches to IHRM ‡ Cross-cultural management Cross Examine human behavior within organizations from an international perspective to describe. compare and analyze HRM systems and IR in different countries how HRM is practiced in multinationals 1±6 ‡ Comparative HRM and Industrial Relations  Seeks ‡ HRM in multinational firms  Explore .

Interrelationships between Approaches of IHRM 1±7 .

20. Rosener.Diversity as an Organizational and HR Challenge in MNE Source: Marilyn Loden and Judy B. 1±8 . p. Workforce America: Managing Employee Diversity as a Vital Resource.

A Definition of Human Resource Management ‡ Human Resource Management (HRM) involves all management decisions and practices that directly affect the people who work for the organization. ‡ 1±9 . ³Human Resources´ the people who work for the organization organization.

 ³Management´ represents the role of HRM as part of management that implies that it¶s not only an administrative function that carries out the formulated policies but also a managerial function that contributes to strategy formulation. 1±10 .A Definition of Human Resource Management (cont¶d)  ³Human´ represents the dimension of HRM which relates to the soft aspects such as commitment of employees through participation and the most important assets being the employees.  ³Resource´ represents the hard aspects such as the strategy link of HRM and the importance of efficient utilization of employees.

The General Field of HR  Major Functions and Activities ± Human resource planning ± Staffing ‡ Recruitment ‡ Selection ‡ Placement ± Performance appraisal ± Training and development ± Compensation and benefits ± Industrial relations 1±11 .

Jobs. and People ± The Strategic Management of Human Resources ± Human Resource Planning ‡ Acquiring Human Resources ± Selection ± Recruitment ± Integration 1±12 .Human Resource Management Functions ‡ Planning for Organizations.

Human Resource Management Functions (cont¶d) ‡ Building and Motivating Performance ± HR Development ± Performance Appraisal ± Compensation Systems 1±13 .

Human Resource Management Functions (cont¶d) ‡ Maintaining Human Resources ± Benefits ± Safety & Health ± Collective Bargaining ± Organizational Exit ± Employment transitions ‡ Multinational Human Resource Management 1±14 .

Strategic Decisions and Their Implications for Human Resource Management 1±15 .

Strategic Decisions and Their Implications for Human Resource Management (cont¶d) 1±16 .

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 1±17 .

A Model of IHRM 1±18 .

Some Terms Defined ‡ Host Country National (HCN): Belongs to (HCN): the Country where the subsidiary is located ‡ Parent Country National (PCN): Belongs to (PCN): the Country where the firm has its headquarters ‡ Third Country Nationals (TCN): Belongs to (TCN): any other country and is employed by the firm 1±19 .

and HCNs transferred into the parent country  Global flow of HR: more complexity in activities and more involvement in employees' lives 1±20 .What is an expatriate?  An employee who is working and temporarily residing in a foreign country ‡ Some firms prefer to use the term ³international assignees´ ‡ Expatriates are PCNs from the parent country operations. TCNs transferred to either HQ or another subsidiary.

International Assignments Create Expatriates: 1±21 .

and almost 70% sent to less developed nations return home early 1±22 .The Expatriate Problem ‡ High Expatriate Failure Rates ‡ Average cost per failure to the parent firm can be as high as three times the expatriate¶s annual domestic salary plus the cost of relocation ‡ Between 16% & 40% of all American employees sent abroad to developed nations.

Difficulties with new environment 1±23 . Lack of technical competence 7. Inability of spouse to adjust Manager¶s inability to adjust Other family problems Manager¶s personal or emotional maturity Inability to cope with larger overseas responsibility 6. 4. 5. 3.Reasons for Expatriate Failure 1. 2.

terrorism exposure:  Broader external influences: government influences: regulations. culture activities: orientation. spouses.Differences between Domestic HRM and IHRM  More HR activities: taxation. ways of conduct 1±24 . administrative services  The need for a broader perspective: cater to perspective: multiple needs  More involvement in employees¶ personal lives: lives: adjustment. children  Changes in emphasis as the workforce mix of expatriates and locals varies: fairness varies:  Risk exposure: expatriate failure.

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 1±25 .Differences between Domestic HRM and IHRM: variables ‡ Complexity involved in operating in different countries.

Variables that Moderate Differences between Domestic HR and IHRM 1±26 .

Forces for Change ‡ ‡ ‡ ‡ Global competition: competition: Growth in mergers. acquisitions and alliances: alliances: Organization restructuring: restructuring: Advances in technology and telecommunication: telecommunication: 1±27 .

Impacts on Multinational Management ‡ ‡ ‡ ‡ Need for flexibility: flexibility: Local responsiveness: responsiveness: Knowledge sharing: sharing: Transfer of competence: competence: 1±28 .

Managerial Responses ‡ Developing a global ³mindset´: ³mindset´: ‡ More weighting on informal control mechanisms: mechanisms: ‡ Fostering horizontal communication: communication: ‡ Using cross-border and virtual teams: crossteams: ‡ Using international assignments: assignments: 1±29 .

Factors that Influence the Global Work Environment 1±30 .

HQ controls Ethnocentric: PCNs dominate. HCNs manage subsidiaries. ‡ Geocentric: Ignores nationality in favor of Geocentric: ability and competence needs in a worldwide integrated business strategy. 1±31 .Approaches To International Human Resource Management ‡ Ethnocentric: Highly centralized. ‡ Polycentric: Decentralized. Each subsidiary Polycentric: has some degree of decision making autonomy.

Convergence or Divergence?  Large corporations¶ preference for consistent worldwide systems  Smaller companies¶ desire for more professional systems  Need to follow local HRM laws  Development of unique techniques and practices to suit local cultural and legal requirements 1±32 .

Choosing an Approach to IHRM ‡ ‡ ‡ ‡ ‡ ‡ Corporate International Strategy Political and Legal Concerns Level of Development in Foreign Locations Technology and the Nature of the Product Organizational Life Cycle Cultural Differences 1±33 .

Thank You 1±34 .

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