BUSN3025

INTERNATIONAL HUMAN
RESOURCE MANAGEMENT

Copyright 2003-2006, Chris Chan 1

 BACKGROUND
 Consultation: Mon 11-12pm and Tues 1-
3pm
 CRISP 1069
 61250386
 chris.chan@anu.edu.au

Copyright 2003-2006, Chris Chan 2

 Major differences between
domestic HRM and IHRM
 Business activities e.g. taxation, international relocation,
expatriate remuneration, performance appraisals, cross-
cultural training and repatriation
 Increased complexities e.g. currency fluctuations, foreign
HR policies and practices, different labor laws
 Increased involvement in employee’s personal life e.g.
personal taxation, voter registration, housing, children’s
education, health, recreation and spouse employment
 Complex employee mix – cultural, political, religious,
ethical, educational and legal background
 Increased risks e.g. emergency exits for serious illness,
personal security, kidnapping and terrorism

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 Myths about globalization
 Myth #1: Global = International
 Myth #2: Global strategy means doing
same thing everywhere
 Myth #3: Globalizing = stateless
corporation, no national/community ties
 Myth #4: Globalization requires
abandoning country images and values
 Myth #5: Globalizing means tackling on
acquisitions or alliances in other countries,
without much integration/change
 Myth #6: A strategy must involves
sales/operations in another country
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Strategies of international, multinational,
global & transnational organizations
 International company – transports its business
outside home country; each of its operations is a
replication of the company's domestic
experience; structured geographically; and
involves subsidiary general managers
 Companies offering multiple products often find it
challenging to remain organized e.g. need to
have a common information systems for
accounting, financial and management controls,
and marketing. Most evolve to become
multinational companies

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Strategies of international, multinational,
global & transnational organizations
 Multinational company – grows and defines
its business on a worldwide basis, but
continues to allocate its resources among
national or regional areas to maximize the
total.

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Strategies of international, multinational,
global & transnational organizations
 Global organizations – treat the
entire world as though it were one
large country; may be the entire
company or one or more of its
product lines; may operate with a
mixture of two or more
organizational structure
simultaneously.

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Strategies of international, multinational,
global & transnational organizations
 Transnational organization - Use
specialized facilities to permit local
responsiveness; more complex
coordination mechanism to provide
global integration

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Global efficiency and local responsiveness
of different types of firms

High

Global Global Transnational

efficiency
International Multinational
Low Local responsiveness High

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 Orientation to international
operations
(1) Australian organization with international
operations
 All senior and many middle management
positions held by Australians
 Highly centralized in Australia, large head office
 Instruction and advice from Australian head
office to subsidiaries
 HR policies and practices are predominantly
Australian with some modification to satisfy
foreign requirements
 Australian corporate culture

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 Orientation to international
operations
(2) Australian multinational organization
 Localization of some management positions but
all top corporate positions held by Australians
 Some decentralization to regional or area
headquarters
 Regional headquarters is the main source of
communications; instructions from Aust head
office to regional headquarters
 HR policies and practices are mixed
 Mix of Australian and host country culture

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 Orientation to international
operations
(3) Australian global organization
 All management positions are open to

everyone regardless of nationality

 Decentralized decision making

 Two-way or multiple-way communication

between headquarters
 HR policies and practices are benchmarked

on best international practices

 International corporate culture

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 Example from Japanese MNCs
Campbell, N. (1991). How Japanese multinationals work so well. Prism,
Prism, 4, 61-69.
1. Borderless structure and bottom-up decision-making processes
that encourage communication and information flow among all
components of the company and extend the network to its key suppliers,
distributors, and other business partners.

2. Custodial leadership that emphasizes values and vision and is skillfully

unassertive, while energizing and challenging middle managers with
demanding targets.

3. Human resource management, including socialization, training, and

promotion via a hierarchy of ranks, job rotation, and appraisal systems
that promote hard work, commitment, and competition among peers.

4. Incremental planning and control that help a company expand little

by little, focusing on new products and the relentless pursuit of operating
improvements, rather than "grand designs" for competitive advantage.

5. An extended family model that encourages and rewards commitment.

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 IHRM - a shift in thinking
Laurent (1986)

 Explicit recognition by parent org of

the existence of assumptions and
values of home & host cultures
 Explicit recognition by parent org –
ethnocentrism is neither good/bad,
has strengths and weaknesses
 Explicit recognition of subsidiaries’
preferences – which may be different

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 IHRM - a shift in thinking
Laurent (1986)

 Willingness to acknowledge cultural

difference – discuss and learn
 Genuine belief in creative and
effective ways of managing people
through cross-cultural
training/learning

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 Important lessons for global firms
 The need to manage change
 The need to respect local cultures
 The need to understand a
corporation’s culture
 The need to be flexible
 The need to learn

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 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)
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 Main challenges in IHRM
 Different labor 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

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 Strategies for managing a global
workforce
(1) Implement the aspatial career strategy
 Get people from everywhere (geocentric approach)
 Expats work in multiple countries during the course of their
career
 Gain a lot of knowledge about different cultures & operations
 Develops in-depth knowledge
 Use previous knowledge for new assignment
 Extremely high cost
 Mainly managers, not technicians

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 Strategies for managing a global
workforce
(2) Implement the awareness-building assignment
strategy
 Expose a candidate to cultural training exercises
 Usually for short term (3 months to one year)
 Family members usually not required to relocate
 Usually used to train candidates for future
assignments
 Learn from foreign assignment and bring experience
back to HQ

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 Strategies for managing a global
workforce
(3) Implement the SWAT team strategy
 Highly mobile teams for short term
assignments
 Deployed throughout the organization to
different parts of the world
 No development agenda, plain
troubleshooting
 Transfer technical knowledge to locals
as they fix problems
 E.g. technical troubleshooters

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 Strategies for managing a global
workforce
(4) Implement the virtual solutions strategy
 Collection of practices that exploit electronic
communication
 E.g. internet, intranet, videoconferencing, electronic
databases, email, electronic expert systems
 Low cost and very fast in terms of disseminating
knowledge
 Used by Xerox and Ford

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 Key learning themes
 Understand the main differences
between domestic HRM and
international HRM
 Able to demystify globalization
 Understand strategies adopted
by international, multinational,
global and transnational
organizations
 Important lessons to be learnt
by global firms
 Understand the
difficulties/challenges in IHRM
 Strategies for managing a global
workforce

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