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Human resource management refers to all activities undertaken by an organization to effectively utilize its human resources. These activities include, amongst others, HR planning, staffing, performance management, development, compensation and managing employee relations.

In order to understand which activities change when HRM goes international, we have to define IHRM first. Broadly speaking, the consensus is that IHRM is about the worldwide management of human resources. There are a few definitions, according to Schuler and Tarique (2007), “…the field of IHRM is about understanding, researching, applying and revising all human resource activities in their internal and external contexts as they impact the processes of managing human resources in organizations throughout the global environment to enhance the experience of multiple stakeholders.“

More specifically, according to Stahl and Björkman in their Handbook of research in International Resource Management, IHRM is, “We define the field of IHRM broadly covers all issues related to the management of people in an international context. Hence our definition of IHRM covers a wide range of human resource issues facing MNC‟s in different parts of the organizations. Additionally, we include comparative analyzes of HRM in different countries”.

In other words, the purpose of IHRM is to enable the multinational enterprise (MNE) to be successful on a global level. Strategic international human resource management (SIHRM) focuses on strategic HRM in MNEs and recognizes the importance of linking HRM with organizational strategies in order to achieve sustainable competitive advantage.

. medical care. providing housing.). shopping. host government relations and language translation services. training. providing immigration and travel details.Differences between domestic and international HRM More HR activities To able to operate in an international environment. and recreation as well as school information and so on. international relocation and orientation (arranging for pre-departure. human resource department must able to involve or perform a number of activities that would not be necessary in a domestic environment such as: international taxation (usually applicable for expatriates in both domestic and international tax liabilities). administration services for expatriates.

expatriate failure or premature return of expatriate from international assignment is potentially a high-cost problem for most MNE‟s as the expenses may be as high as three times more than domestic salary. has shown to have an impact as employees assess potential international assignment. the emphases put on various human resource activities differ. This broadens the responsibilities of local HR activities such as planning. The organization would no longer use the parent-country nationals (PCN) and third country nationals (TCN) as trained locals (HCN. The organization of the HR department must ensure that the expatriates understand the relocation and all it entitles. host-country nationals) become available. They will be able to standardize and endorse premiums and policies that are beneficial to both organization and employee. such as housing arrangements. more international perspective on issues or an idea would be more beneficial to an organization in a foreign country or when hiring foreign workforce (expatriates). health care and all aspects of the compensation given. . training and effective management in both parent-country nationals (PCN) and thirdcountry nationals (TCN) employees. training and development and compensation. Another aspect of risk is terrorism. Risk exposure The human and financial impacts of failure in international arena are more severe than in domestic business. particularly since the act of terrorism on 9/11 in New York in 2001. staffing. For example.Need for broader perspective A broader. Changes in emphasis as the workforce varies in between PCNs and HCNs When foreign operation matures. More involvement in employee‟s personal life A greater need or degree of involvement in employee‟s personal lives is necessary for the selection.

Broader external influences The major external factors that influence IHRM are the type of government. whether by hired the quota of cheap employee as well as maintaining a quota of host-country nationals required by the authorities. . The impact of different factor influences decision making in terms of labor used. that will drive the HR department to learn and interpret the local ways of doing business and the general conduct regarding activities such as gift giving and will be likely be more involved in administering benefits either provided or financed by the multinationals. the state of the economy and the generally accepted practices of doing business in each of the various host countries in which the multinational operates.

small and medium sized enterprises in many instances are struggling to professionalize their business activities in terms of formal strategic planning procedures. organizational structure. faced with this changing competitive environment. by conducting training programs that could include strategy and communication seminars would boost the capacity in perceiving relevant environmental . This would encourage staff to grow in boundary spanning position. Moreover. SME‟s must grow in not only in operational method but most importantly in human resource management. It consists of new beginner that wanted to be a part of the business field. information technology systems. training and development activities tend to be rather short-term orientation which lend to the stunted growth of the enterprise. They would be able to resists to impose “large firm thinking” in aspect relevant to internalization decision. In order to be in a globalize arena. Besides that. SME‟s preferable chooses cross border alliances as their foreign entry strategy to internationalization after exporting and subsidiaries has shown poor result or failure as the long term strategic needs are not met. managing expatriate management as well as overcome the limitation of lacked of resources and to cope with outsourcing. accounting systems. SME‟s should have noted the cultural distinction between the behavior and impart the vital formalized training rather than socialization and local networks. decision making systems. To able to compete in the international stage. To overcome this limitation. It is a challenge to the human resource management as organizational leaning is often neglected and the consequences shows in the long run of the business operation. the human resource department must grow in terms of learning. Despite the small sized business. However. For example. small organization or rather.Important challenges for human resource management in internationalize in small-medium enterprise (SME‟s) SME‟s or also known as small-medium enterprise is what it stands for in the business industry. their contribution of to the country‟s economy is significantly important to the country‟s growth. The challenges of learning The learning processes are of the critical importance in the volatile global environment of modern business. clear job descriptions and so on.

This would reduce the chance of premature expatriates and well as prevent the possibility of highly cost expenditures. The lacking of the existence of sophisticated management strategies and as well as the failure to appoint a HR specialist just because that the cost cannot be justified due to the size of SME‟s itself. Besides that. limited information to locate or analyze markets. In other words. training is perceived as “unaffordable luxury” especially in regards to the training of the expatriate. it‟s simply not importance to a small organization as their main tasks are just administrative tasks and most of the important HR decision is taken by the founder or the owner of the enterprise.development and would be motivated enough to report and share their observation regularly and systematically. To overcome is challenge. the second important challenge in an internationalized SME is expatriate management. The lack of knowledge about the „optimal‟ balance between formal and informal training still exists in SME‟s as well as the ignorance of the relationship between training and its effect to firm‟s performance. the cultural integration of foreign acquisition remains a challenge for SME‟s. There are many barriers that would obstruct the path to internationalization for a SME. the limited resource of the HR department and outsourcing is also one of the important changes in an internationalized SME‟s. Besides that. This is because to SME‟s. Lastly. namely shortage of working capital to finance exports. the inability to contact potential overseas customers and many others-to name a few. The first aim is to find a focus fit individual with the rights skills and the right attitude to be able to coach and to be an exemplary employee to ensure that majority or all staff will be able to mellow and reflect the organizational attributes in an international standard in their work. It is problematic because:  Complexity of the HR activities will likely to result in becoming a significant drain on the management time and resources. . This result in the control of the internationalization processes and time are scarce. This is due to the training entails of the language course as well as the cross cultural courses only give a minor role emphasis. indentifying foreign business opportunity. SME‟s need to engage more on the quality training for more individual chosen to be sent to perform tasks and assignments abroad.

This option can lead to improve managerial satisfaction and higher quality HR decision. This would ensure a smoother and faster operational management in an organization. SME‟s can cultivate their own specialize HR department to deal with not only administrative tasks but only all of the staff that related to the personnel of the enterprise. To prevent the usage of outsourcing with providers of HR related services. To overcome this problem. vision. managing the company would be one step smoother and easier to cope with other challenges that may arise. objectives. Many HR tasks involve substantial complexity and. By having an efficient HR department. thus. and short and long term goals. Based on contractual agreement. the quality of HR decision may well be affected that the general managers often lack the significant training and expertise in HR. while able to grow into a bigger firm that compass of trust and the assurance of the ability of the right employee that would reflect the organization‟s mission. . However on the long run of the business. SME can seek out provider HR related services. founder of enterprises or manager of a small organization should change his or her mindset and learn to decentralize appropriate decision to their designated position inside and organization while every decision made is informed and consulted with the higher authorities. This would help the management to be able to concentrate on the production line and able to fully optimize resources while bear in mind of creating a high quality goods of product and services. outsourcing is un-trustable as important activities need to be monitored to avoid leakage of confidential information.

HCN or even TCN to ensure the operational management can be smoothly conducted at home and even abroad. . The challenges are often important for the growth or one step closer for SME‟s to reach internationalization or globalization. wholly integrated within an organization. Human resource management is responsible to help the organization to achieve their own my fitting the right people to the right job that is aligned to the organization‟s culture as well as managing the whole welfare of the personnel and employees whether they are PCN. Therefore. An organization‟s growth and success often depends on the enterprise having the right staff that would not only bring profit but also image that is long lasting in every customer whether national or international. international human resource management is not only about managing people but it‟s more.Conclusion Human resource management in an international arena is challenging and often conflicting with an organization‟s own belief or culture.