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What are the similarities and differences between domestic & international HRM.?

Ans: IHRM is all about acquiring, allocating & effectively utilizing human resources in multinational organizations.


Staffs are placed within the national boundaries.

Staffs work outside their national boundaries.

Less number of Rule and Regulations to be Very high number of rules and regulations which managed.- mostly employment and taxation rules are related to taxation, employment rules, of the home country. language translating services, work permit etc. There is uniform policy in administration Broader Perspective- Management has to be done according HCNS, PCNS and TCNS.

No special attention into the personal life. Special attention to personal life of expatriate Confined to crche and cultural interactions. employees- cultural training, schooling of children, employment opportunity for spouse. Challenges are confined to the situation of a IHRM management has to be ready to face particular country. challenges like underperformance of expatriate employees, diplomatic relationships between host country and parent country, currency exchange rates which are variable and may impact the benefits of TCNS and PCNS. Special Training is not required for Socio Special Training for expatriates so that they Cultural adaptation. might not face unnecessary hassles in the alien socio cultural environment.


The basic functions of domestic HRM 7 IHRM are common but the way of operating it is a bit different. Those functions include:







Which topics are covered by Re-patriation process?

Ans. Expatriation process also includes repatriation: the activity of bringing the expatriate back to the home country. Expatriation includes repatriation





The Repatriation Process






1) PREPARATION involves developing plans for the future and gathering information about the new position. The firm may provide a checklist of items to be considered before home or a thorough preparation of employee and family for the transfer to home. There may be some inclusion of repatriation issues in pre-departure training provided to the expatriate. 2) PHYSICAL RELOCATION refers to removing personal effects, breaking ties with colleagues and friends and travelling to the next posting, usually the home country. Most multinationals use removal firms or relocation consultants to handle the relocation, for both the movement out and the return home of the employee and family, and this may be formalized in their HR policies. 3) TRANSITION means settling into temporary accommodation where necessary, making arrangements for housing and schooling and carrying out other administrative tasks. Some companies hire relocation consultants to assist in this phase also. 4) READJUSTMENT involves coping with such aspects as company changes, reverse culture shock and career demands. It is the one that seems to be the least understood and most poorly handled.


Explain multinational performance management?

Ans. The most challenging aspects for a firm operating internationally is how to manage the performance of its various overseas facilities. Performance management is a process that enables the multinational to evaluate and continuously improve individual, subsidiary unit and corporate performance, against clearly defined, set goals and targets.



The multinational has specific expectation for each of its foreign subsidiaries, in terms of market performance and contribution to total profit and competitiveness. When evaluating multinational performance following should be considered.. 1. Whole Versus Part A multinational is a single entity that faces a global environment, which means that it simultaneously confronts differing national environments. Integration and control imperatives often place the multinational in the position where it decide that the good of the whole is more important than one subsidiarys short term profitability.

2. Non-Comparable Data Frequently, the data obtained from subsidiaries may be neither interpretable nor reliable. Physical measures of performance may be easier to interpret.

3. Volatility Of the Global Environment The turbulence of the global environment requires that long term goals be flexible in order to respond to potential market contingencies. An inflexible approach may mean that subsidiaries could be pursuing strategies that no longer fit the new environment.

4. Separation By Time & Distance Judgments concerning the congruence between the multinational and local subsidiary activities are further complicated by the physical distances involved, time zone differences, the frequency of contact between the corporate head

office staff and subsidiary management and the cost of the reporting system. It is often necessary to meet managers personally to understand the problem fully.

5. Variable Levels Of Maturity Without the supporting infrastructure of the parent, market development in the foreign subsidiaries is generally slower and more difficult to achieve than at home, where established brands can support new products and new business areas can be cross-subsidized by other divisions.

6. Control & Performance Management Performance management is the part of multinationals control system. Through formal control mechanism and communication the feedback and appraisal aspect, performance management also contributes to shaping corporate culture both formally and informally.

Thus by adopting a performance management approach, multinationals are drawing on a number of human resource management functions to realize performance goals set during the performance appraisal process.


How various staffing approaches help to sustain business operation?

Ans. The IHRM literature uses four terms to describe MNE approaches to managing and staffing there subsidiaries. These terms are taken from seminal work of Perlmutter, who claimed that it was possible to identify among international executives 4 primary attitudes Ethnocentric, Polycentric, Geocentric & Regeocentric.

ETHNOCENTRIC Fills management positions by Home Country nationals POLYCENTRIC Uses Host Country Nationals to manage local subsidiaries GEOCENTRIC Seeks best people for key jobs throughout the organization, regardless of their nationality REGEOCENTRIC Reflects the geographic strategy & structure of MNE


The ethnocentric staffing policy reflects the belief that principles & practices used by home-office country are superior to those used by companies in other nations. Thus, given its success in the home-country market, there is a little need to adapt principles & practices when transferred to foreign markets.


The polycentric outlook holds that staffing policies ought to adapt differences between operations in home country & host country. It sees the effectiveness of the business practices of foreign markets as equivalent to those in home country. This approach motivates the company to staff each operation from headquarters in home-country to each foreign subsidiary with people from local environment. Thus, this approach is a key feature of multi-domestic strategy.


Unlike the ethnocentric & polycentric approaches, geocentric staffing policy is not tied to a particular home or host nation. Instead, it scans the whole world looking for best people around to place them on key jobs in the organization. This approach enables the MNE to build the requisite cadre of international executives who can move between countries & cultures without forfeiting their effectiveness.


This approach reflects the geographic strategy & structure of the multinationals. Like geocentric approach, it utilizes wider pool of managers but in a limited way. Staff may move outside their countries but only within the particular geographic region. They are not promoted to headquarters position.

Q.5. what should be the main objective for multinational firm with regard to Compensation policy? Ans. Management of Compensation is all about development, implementation, maintenance, communication & evaluation of reward processes. 1. The topic focuses on incentive mechanisms & compensation systems & their function in influencing the behavior of employees of multinational firms. 2. The policies so formulated should be consistent with the overall strategy. Structure & business need of the multinationals. 3. The policy must work to attract & retain the staff in the areas where the multinational has the greatest needs & opportunities. 4. The policy should facilitate the transfer of international employees in the costeffective manner for the firm. 5. The policy must give due consideration to equity & ease of administration. 6. The overall objectives of the expatriate must also be achieved with reference to the compensation policy of the firm.

Q.6. What work practices can be standardized? Ans. Standardization is an adoption choice that confronts the multinational in other areas of its operations which applies to the management of global workforce.

Factors influencing the standardization

Host-country Culture & Workplace Environment

Global/Local Work Practices & Hrm

Mode Of Operation

Relative Importance Of Subsidiary

Size & Maturity Of The Firm

1. Host Country Culture & Workplace Environment:-

Culture acts as a moderating variable in international HRM. It includes group of people sharing common goals, values, attitudes & beliefs. Work behavior is culturally determined to the extent it is contained in the role definition &

expectation. Standardization of the work practices involves behavior modification through corporate training programs, staff rotation, rewards & promotions. Thus culture has a strong bearing on the behavior of the employees.

2. Mode of Operation:A multinationals ability to impose standardized work practices is not only affected by cultural differences that may create resistence to change from subsidiary staff. One managerial choice is the form of operation that the multinational uses. Entering via an acquisition may provide the multinational with market advantages, but its ability to transfer technical knowledge, systems & HR practices may be restricted.

3. Firm size, maturity and international experience:-

Key factors influencing international operations are the size & maturity of the multinational. A smaller multinational, a relative newcomer to international business, may not have the same level of ability or resources, and an alternative mode of operation such as a joint venture would be an attractive proposition.

4. Subsidiary mandate:-

Linked to the issue of size & maturity of the multinational is the position of the subsidiary in relation to the rest of the organization and its mandated role what is expected of it in terms of contribution to global activity. Recently, their has

been considerable interest in looking at the role of the subsidiary. Centers of excellence at the subsidiary level can be viewed as an indication of how some multinationals are recognizing that level of expertise differ from headquarters.

5. Global or local work practices & HR:-

The analysis of HR & workplace standardization v/s. adaptation reflects the convergence divergence debate. Forces for standardization are mainly internal to the multinational driven by the need for control and to sustain competitive advantage. Host governments though may encourage standardization through the transfer of foreign work practices & processes. Forces for adaptation comes from external constrains that the multinational confronts in its various markets.

The End