International Human Resources Management

Presented By
Maksudul Huq

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 IHRM
 The process of procuring, allocating and effectively utilizing
human resources in an international business is called
international human resources management (IHRM).
 This is the HRM issues and problems arising from the
internationalization of business, and the HRM strategies,
policies and practices which firms pursue in response to the
internationalization process
 IHRM is the management of HR in business operations in at
least two nations

Need for IHRM

 Managing expatriates
 Globalization has forced HRM to have international
orientation
 Effectively utilize services of people at both the corporate
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 Differences between Domestic HRM and IHRM
 More HR activities: taxation, culture orientation, administrative
services
 The need for a broader perspective: provide to multiple needs
 More involvement in employees’ personal lives: adjustment,
spouses, children etc.
 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
 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

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 Extent of reliance of MNC on home country domestic market
 Major Diffe. 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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 Main challenges in IHRM

 High failure rates - 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 – identifying
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. holy objects, prayer, taboos,
holidays, etc
 Educational level attained
 Social organizations e.g. social institutions, authority
structures, interest groups, status systems

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 Models of IHRM

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 Reason for Growing interest in IHRM

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 Indicators of Globalization

 International trade is growing at a more rapid rate than

world output
 Foreign direct investment (FDI) flows have set record
levels in recent years
 Cross-border inter-firm agreements have rise
dramatically during the last 20 years
 Social, economic, and political developments
throughout the world have changed the way global
business is conducted.

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 Pressures of globalization
 Globalization is the system of interaction among the countries of
the world in order to develop the global economy.
 Globalization involves technological, economic, political, and
cultural exchanges made possible largely by advances in
communication, transportation, and infrastructure.
 The advent of the era of globalization along with the
advancements in information technology (IT) has transferred the
world around us. It has brought to centre stage the importance of
human resources, more than ever before.
 The pressures it poses on IHRM include:
- Remaining competitive throughout the world
- Efficient
- Locally Responsive
- Flexible and adaptive
- Capable to transforming learning across their globally
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dispersed units.
 Global Challenges

International companies face many challenges when try

to make HR Practices consistent across all the
locations/offices.
Top Three challenges included:
 Variations in social, political and economic
circumstances.
 Different locations/offices have their own way of doing
things are resistant to change.
 The perceived value of the HR function varies across
locations/offices.

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 Characteristics of IHRM

 More involvement in employee personal lives

 More HR activities
 Need for a broader perspective
 Changes in emphasis as the work force mix of
expatriates and local vary
 Risk exposure
 More external influences.

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 More HR activities

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 More HR activities ...

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 Need for a Boarder Perspective

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 Types of International Organizations
There are four types of International Organizations:
1. International Corporations
2. Multinational Corporations
3. Global Corporations
4. Transnational Corporations
1. International Corporations
Domestic firms that builds on its existing capabilities to
penetrate overseas market.
Example : Honda, General Electric
2.Multinational Corporations
- MNCs have operating units (subsidiaries) located in foreign
countries
- Subsidiaries function as autonomous units
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Examples : Shell, Philips
 Types of International Organizations …
3.Global Corporations
- Maintains control over its worldwide operations
(subsidiaries) through a centralized home office.
- They treat the entire world as a single market
Examples : Matsushita –Panasonic Global

4.Transnational Corporations
- Provides autonomy to independent country operations but
bring these operations together into an integrated whole
through networked structure
- They combines the local responsiveness of an MNC and the
efficiency of a global corporation
Examples : Ford & Unilever
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 Major Factors Affect IHRM

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 IHRM Planning

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 IHRM Recruitment and selection

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 Hiring PCNs

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 Hiring HCNs

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 Hiring TCNs

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 Different Approaches in Global Compensation

The “Balance Sheet Approach”

 Home-country groups of expenses—income taxes, housing,
goods and services, and discretionary expenses—are the
focus of attention.
 The employer estimates what each of these four expenses is
in the expatriate’s home country, and what each will be in
the host country.
 The employer then pays any differences such as additional
income taxes or housing expenses.

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 Different Approaches in Global Compensation

Local Going Rate Approach

 This can be desirable in high-paying countries such as the US
of Switzerland
 The market rate is also preferred when the assignment is
likely to be long term or permanent.
 The main advantage of this method that it is administratively
simpler than the balance sheet.

Hybrid Approach
 This approach refer variation of the greater of home or host
system where a balance sheet is compared to local market
rate equivalent.

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