INTERNATIONAL HUMAN

RESOURCE MANAGEMENT

CONTENTS
Introduction to IHRM
Challenges to IHRM
Equal employee opportunity
Network organizations

Human Resource Management

Human Resource Management (HRM)
involves all management decisions
and practices that directly affect the
people who work for the
organization.
Human Resources the people who
work for the organization.

What is IHRM?
International HRM (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.

OBJECTIVES of IHRM
To reduce the risk of
international human
resource
To aviod cultural risks
To aviod regional
disparities
To manage diversifies
human capital

P.Morgans Model of IHRM

Human resource activities

Procurement
Allocation
Utilization of human resources

Nation/country
categories where firms expand and operate

Host country
Parent country
Third country

Categories of employees in an MNE

Parent-country
nationals (PCNs)
Employees who were
born and live in a parent
country.
A parent (or home) country:
the country in which a
companys corporate
headquarters is located.

Categories of employees in an
MNE
Host-country nationals
(HCNs)

Employees born and raised

in a host country.
Host country: a country in
which the MNE seeks to
locate or has already located
a facility.

Third-country nationals
(TCNs)

Employees born in a
country other than a parent
or host country.

What is an expatriate?
An employee who is working and
temporarily residing in a foreign country
Some firms prefer to use the term
international assignees
Expatriates are PCNs from the parent country
operations, TCNs transferred to either HQ or
another subsidiary, and HCNs transferred into
the parent country

Global flow of HR: more complexity in

activities and more involvement in
employees' lives

International Assignments Create

Expatriates

Reasons for Expatriate Failure

1.
2.
3.
4.

Inability of spouse to adjust

Managers inability to adjust
Other family problems
Managers personal or emotional
maturity
5. Inability to cope with larger overseas
responsibility
6. Lack of technical competence
7. Difficulties with new environment

Why IHRM

Factors that Influence the Global Work

Environment

Forces for Change

Global competition:
Growth in mergers, acquisitions
and alliances:
Organization restructuring:
Advances in technology and
telecommunication

Impacts on Multinational
Management

Need for flexibility:

Local responsiveness:
Knowledge sharing:
Transfer of competence:

Managerial Responses
Developing a global mindset
More weighting on informal control
mechanisms
Fostering horizontal
communication
Using cross-border and virtual
teams
Using international assignments

Differences between Domestic HRM and

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

Differences between Domestic HRM

and IHRM: variables
Complexity involved in operating in
different countries, 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

Variables that Moderate Differences

between Domestic HR and IHRM

Qualities of Global Managers

Understand the worldwide business

Learn about many cultures
Work with many types of people
Create cultural synergy
Adapt to living in many cultures
Use cross-cultural skills daily
Treat foreign colleagues as equals
Use foreign assignments as career
development

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)

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

EQUAL EMPLOYEE OPPORTUNITY

Equal Employment
Opportunities (EEO)
means eliminating
barriers to ensure
that all employees
are considered for the
employment of their
choice and have the
chance to perform to
their maximum
potential.

EQUAL EMPLOYEE OPPORTUNITY

EEO practices include:
fairness at work,
hiring based on merit and
promotion based on talent.
It concerns all aspects of
employment including recruitment,
pay and other rewards, career
development and work conditions

OBJECTIVES
To promote recognition and acceptance of
everyone's right to equality of opportunity
TO eliminate, as far as possible,
discrimination
against
people
by
prohibiting discrimination on the basis of
various attributes
TO eliminate, as far as possible, sexual
harassment
TO provide redress for people who have
been discriminated against or sexually
harassed.

EQUAL EMPLOYEE OPPORTUNITY

Discrimination on the basis of: Disability
Race
Age
Minority
Marital status
Equal employment opportunity act is
implemented by many countries to stop
these discriminations.

Diversity in workforce
Differences among people in age, gender,
race, ethnicity, religion, sexual
orientation, socioeconomic background,
capabilities/disabilities and in the
thought process.

management system which incorporates the

differences found in a multicultural
workforce in a manner which results in the
highest level of productivity for both the
organization and the individual.

Diversity Wheel
Diversity is the mixture of people in business, with their variety of
backgrounds, experiences, styles, cultures, skills and competencies.

Learnings from the Wheel

As individuals, we are all diverse
As organizations and work groups,
some are more diverse than others
Important to understand your mix
(customers, employees &
stakeholders) now both current state
and desired state
People are both similar and different
among a variety of dimensions
Need to understand the impact of
culture

NETWORK ORGANISATIONS
International Division Structure
Global Product Division
Global Area Division
Global Functional Division Structure
Multinational Matrix Structure

International Division Structure

Structural arrangement that handles all
international operations out of a division
created for this purpose
Assures international focus receives top
management attention
Unified approach to international operations
Often adopted by firms still in
developmental states of international
business operations
Separates domestic from international
managers (not good)
May find it difficult to think and act
strategically, or to allocate resources on a
global basis

International Division Structure

Global Product Division

Structural arrangement in which domestic divisions are given
worldwide responsibility for product groups

Global product divisions operate as profit centers

Helps manage product, technology, customer
diversity
Ability to cater to local needs
Marketing, production and finance coordinated on
product-by-product global basis
Duplication of facilities and staff personnel within
divisions
Division manager may pursue currently attractive
geographic prospects and neglect others with longterm potential
Division managers may spend too much time tapping
local rather than international markets

Global Product Division

Global Area Division

Structure under which global operations
organized on geographic basis

International operations put on same level as

domestic
Global division mangers responsible for all business
operations in designated geographic area
Often used by firms in mature businesses with narrow
product lines
Firm is able to reduce cost per unit and price
competitively by manufacturing in a region
Difficult to reconcile a product emphasis with
geographic orientation
New R&D efforts often ignored because divisions are
selling in mature market

Global Area Division

Global Functional Division

Structure
Structure that organizes worldwide operations
primarily based on function and secondarily on
product

Approach not used except by extractive companies such as

oil and mining
Favored only by firms needing tight, centralized
coordination and control of integrated production processes
and firms involved in transporting products and raw
materials between geographic areas
Emphasizes functional expertise, centralized control,
relatively lean managerial staff
Coordination of manufacturing and marketing often difficult
Managing multiple product lines can be very challenging
because of separation of production and marketing into
different deparments.

Global Functional Division

Structure

Multinational Matrix Structure

Structure is a combination of global
product, area, or functional
arrangements
Allows organization to create specific
type of design that best meets its needs
As matrix designs complexity increases,
coordinating personnel and getting
everyone to work toward common goals
often become difficult
Too many groups to their own way

Multinational Matrix Structure

Transnational Network Structures

Multinational structural arrangement
combining elements of function, product,
geographic design, while relying on
network arrangement to link worldwide
subsidiaries

At center of transnational network structures

are nodes, units charged with coordinating
product, functional, and geographic
information
Different product line units and geographic
area units have different structures
depending on what is best for their particular
operation

Transnational Network Structures

Control Mechanisms