678 DIV. IO: INTERNATIONAL 1-!

RM AND EMERGING ISSUES

• INTRODUCTION TO INTERNATIONAL HRM

What an HR manager does in a multinational corporation varies from firm to firm. It also depend
· s' heauquarters
the manager is located in a global corporat,on J
or ons,·1e m· a fiore1gn son Wheth er
· subsidiary.

Broadly defined, international human resource management (IHRM) is the process of procu .
eating, and effectively utilizing human resources in a multinational corporation. nng, allo.

i
P.Morgan defines international human resource management (IHRM) as the interplay amon
dimensions- Human Resource attitude, types of employees and lastly the country of operation three
· a11 ocatmg,
defined IHRM is the process of procuring, . an d effiec t·1veIy uti·1·12mg
· human resour· roadJy
.
multinational corporation. ces in a

An MNC having few small offices in foreign locations and exporting its products, the work ofan intern .
a11onaJ
HR manager is comparatively simple than a global firms human resource managers having contr .
. . IC1Ing
strategic objectives. The duties include integration of human resource po I1C1es and practices across a nu be
of subsidiaries in different countries so that overall corporate objectives can be achieved. Also havin~ r
approach to flexible HRM and allow for significant differences in the type of HR policies and practices th:
are most effective in different business and cultural settings.
Balancing integration (control and coordination from HQ) and differentiation (flexibility in policies and
practices at the local subsidiary level) have been acknowledged as common dilemmas facing HR and other
functional managers in global corporations.
Broader scope oflHRM is that the HQ-based manager deals with employee groups that have different cultural
backgrounds. The HQ manager must coordinate policies and procedures to manage expatriates from the firm's
home country (parent country nationals, PNCs), host-country nationals (HCNs), as well as third country
nationals (TCNs, e.g. a French manager working for an American MNC in the firm's Nigerian subsidiary)
in subsidiaries around the world.

Parent country
HQ/operations

.PCN,yHCN,. ·~ ·······~=
Subsidiary operations - TCNs Subsidi ary operations -
.country A country B

National
border

111 DIFFERENCE BETWEEN DOMESTIC HRM AND INTERNATIONAL HRM

There are significant differences of International HR as compared with domestic HRM,
lHRM
(I) encompasses more functions,
(2) has more heterogeneous functions,
(3) involves constantly changing perspectives,
(4) requires more involvement in employees ' personal lives,
 CH. 33 : INTERNATIONAL HlJMA
N RESOURCE MANAGEMENT
679
(5) is influenced by more external sources, and
(6) involves a greater level of risk th .
. an typical domestic HRM.
When compared with domestic human re
. HR . source management IHRM .
1f managers are operatmg from a MNC' h d ' requ1res a much broader responsibilities
s ea quarters (HQ) The HR M .
HRM. encompasses
.
more functions has m
. ,
h ·
ore eterogeneous funcf .
anager mvolved with International
I
spect1ves, requ1res more mvolvement i , JOns, mvo ves constantly changing per-
n emp 1oyees personal
and involves a greater level of risk tha ty . .
r ..
fl
ives, is m uenced by more external sources
n pica1 domestic HRM. '

••• RESPONSIBILITIES OF INTERNATIONAL HR MANAGERS

International HR managers must deal with issues as varied as

• international taxation;
international relocation and orientation;
• various other administrative services for expatriates; selecting,
training and appraising local and international employees; and
• Managing relations with host governments in a number of countries around the world.
• (International human resource management (IHRM) is the process of procuring, allocating and effectively
utilizing human resources in a multinational corporation.
The international HRM process involves understanding the strategic context ofHRM within the firm's overall
strategy, recruiting and selecting appropriate managerial personnel, providing necessary training and deve-
lopment, assessing performance, providing compensation, and evaluating managerial retention and turnover.
There are two broad categories of staffing needs facing international human resource managers:
(I) recruiting, training, and retaining managerial and executive employees; and
(2) recruiting, training, and retaining non-managerial employees such as blue-collar production workers and
white-collar office staff.
For non-managerial employees, international firms normally adapt their compensation and performance
appraisal systems to local laws, customs and cultures.
Compensating expatriate managers can be a complex process because factors_such as d_iffere~ces in currency
Valuation, standards of living, lifestyle norms, and so forth must be taken mto cons1derat1on.
An International HR manager if dealing with compensation as HR ~nctio~ area ~e faced with a great
variety of national and international pay issues. For example, _whil~ de~lmg with pay 1~sues, the HQ-based
manager must coordinate pay systems in different coun~1es _with different c~nc1es that may change
1n relative value to one another over time. An American exp?tr1ate 1~ i:01?'0
w~o receives a salary of$ I 00,000
'.flay suddenly find the buying power of that salary dramatically d11~m1shed if the Japanese yen str~ngthens
in value relative to the US dollar. A US dollar purchased 248 yen m 1985, but less than 110 yen m 2000.
 CH. 33 : INTERNATIONAL H1JMAN RESOURCE MANAGEMENT
681
Samsung Heavy Industries- World's second largest ship-builder.
Samsung C&T, a major global construction company.

INTERNATIONAL HUMAN RESOURCE STRATEGY OF SAMSUNG

Samsung Electronics has a systematic program where the Human Resource Managemem (HRM),
education and working departments organically collaborate in human resource development.
• Samsung Electronics also operates various outsourced programs through partnerships with globally
prominent universities and regional specialists to foster a globally competem workforce.
• The HRD organization has a dual system, which includes a company-wide tee/mica/ research centre
that promotes the common core competencies and division level education organizations that are
in charge of the specialized techniques required for each business unit and onsite practice.

HINDUSTAN LEVER LTD. HR POLICIES, PROCEDURE & CROSS CULTURAL ISSUES

+ HUL encourage employment of local residents in our manufacturing operations depending upon
availability of skills.

• All the workmen at the supply chain units are organized and are represented by various unions/
authorized representatives in their units.
I. CHILD LABOUR
II. NOTICE FOR OPERATIONAL CHANGES
III. EMPLOYEE ENGAGEMENT
JV. COMMUNICATION WITH EMPLOYEES
V. WORKING CONDITION, SALARY & BENEFIT PACKAGE
VI. GROWTH OF THE ORGANIZATION

Some of the global staffing challenges are bl d

. . . th cover emergency evacuations for serious health pro _ems I
For example, Chma has special insurance ~t . t dards The bigger challenge is in coping with
. ... R . not meet mtematwna 1 s an ·
medical fac1hties but ussia may . . n countries and their people.
the cultural political legal economic differences amo g

INTER COUNTRY DIFFERENCES AFFECTING HRM . ·

. . rders of the United States generally have the luxury of deal mg with
Companies operating only wi th m t~e bo d legal variables. .
I
a relatively limited set of economic cultura a~ kfi e reflects a multitude of cultural and ethnic
.. oc1ety US wor ore . ltural
The United States is a capitalist competitive s . . · fi d mocracy) help to shape potentially sharp cu
backgrounds shared values (such as an appreciat10n ?~
ae1·1t1·es certainly have their own employment laws,
differences. Although the differences sta tes and
. mumcip .
d"ctable set of legal guidelines regard'mg ma tt ers such
a basic federal framework he Ips pro duce a fair 1Y
d pre 1
health
asemployment discrimination labour safety an h. homogeneity. For example, minimum legally
•I 'ts abroad do not ave
A Company operating mult1p e uni . the United Kingdom to five wee . per
mandated holidays range from none m
ks
t
loyee representatives on boards O irec ors
r;.
ar in Luxembourg. And
they're required
. · ements for emp
While Italy has no formal requir h 0 employees.
· Denmark for companies
In • wi·th more t an 3

Cultural factors . ther words in the basic values their · ~1'.1zensd

·· ad. here fdo
to and
'mg
Countries differ widely in their· cu ltures - m •no the nation's arts, socia
• 1prog ranis pohucs an ways o
1. 1 1
n the ways these values mani'fies t themse ves .
th
1ngs.
. fi Hong Kong th e p eople's Republic of. Chma and the,
3 30 managers rom . ttin the job done. Chinese managers
For example in a study of about d d to be most concerned wilh g~ Hg g Kong managers feel between
United States the US managers te_n. e h onious environment, an on_ '
'
Were most concerned • mam
with · taming arm

....._ these extremes .

682 DIV. 10: INTERNATIONAL HRM AND EMERGING ISSUES

•••• EXPATRIATE MANAGERS

The first key to finding a successful expatriate is a selection process that accurately detennines wh~
culturally flexible and adaptable, has a supportive family situation, and is motivated to accept the overse~
assignment.
-
Strong technical skills
Characteristics of the expatriate manager
Uncertain technical competency -
Good language skills Weak language skills
Strong desire to work overseas Unsure about going overseas
Specific knowledge of overseas culture Family problems
Well-adjusted family situation Low spouse support
Complete support of spouse Behavioural rigidity
Behavioural flexibility Unadaptability - closed to new ideas
Adaptability and open-mindedness Poor relational ability
Good relational ability Weak stress management skills
Good stress management skills
High probability for success Low probability for success

An International Division Structure I

Chief Executive Officer

Home-office
departments Human
Marketing Finance
Operating
divisions

Domestic Domestic Domestic Domestic

Division: Division: Division: Division:
Paint Tools Hardware Furniture

Japan Italy

Office Government
Marketing
Operation Relations
 CH. 33 : INTERNATIONAL HUMAN RESOURCE MANAGEMENT 685

MODEL OF INTERNATIONAL HRM

HR ACTIVITIES

Parent Country Nationals (PCNs)

Third Country Nationals {TCNs)

11 INTERNATIONAL RECRUITMENT
While hiring executives, global companies are guided by three things; ethnocentrism, polycentrism and
egocentrism
a. Ethnocentrism: it is a cultural attitude marked by the tendency to regard one's own culture as superior
to others.
b. Polycentrism: In the polycentric corporation there is a conscious belief that only host country managers
can ever really understand the culture and behaviour of the host country market, therefore, the foreign
subsidiary should be managed by local people.
c. Egocentrism: it assumes that management candidates must be searched on a global basis, without
favouring anyone.
,
Critical Analysis- Staffing Approach of Tata Motors in U.K.
Based on the information regarding the rules for employing workers and staffing regulations in U.K., we
critically analyze the 3 staffing approaches for Tata Motors in U.K.
+ Ethnocentric Approach- Headquarters from the home country makes key decisions, employees from
the home country hold important jobs and the subsidiaries follow the home country resource management
practice.
Positives :
Availability of skilled labour in India
Inexpensive labour in India
• Pol centric Approach_ Each subsidiary manages on a local basis. A local employee heads a subsidiary
bec~use headquarters' managers are not considered_ to have adequate local knowledge. Subsidiaries
usua II y deve Iop hu man resource management practices locally.
Positives:
UK Trade & Investment and our regional_ partners will recommend to reputable, established
emp Ioymen t ag encies with networks of skilled workers
Help you to 1"dentify the right people for your business
• .. .
Utihsmg t he UK's strong national and regional public and private sector networks
How to recruit the right staff and let you know what support is available to train them.
Eastern Europe - Bes t source of skilled migrants for companies in the United K"mg d om
 CH. 33 : INTERNATIONAL HUMAN RESOURCE MANAGEMENT 687

INTERNATIONAL TRAINING AND DEVELOPMENT

careful sel:c~ion is only one side_ofthe coin. To ensure success, expatriates require proper orientation, cross
cultural trammg, career counselling etc.
i. Orientation
1. cultural briefing
2. assignment briefing
3. shipping requirements
ii. cross cultural training
iii. career development and counselling

Training and Development of Human Resource at Samsung

• Professional course provide : Six sigma, GVE, innovation, injection molding, manufacturing and
quality courses to enhance the professionalism and performance of employees.
• Samsung Electronics provides the future leaders ofbusiness partners with opportunities to understand
and experience Samsung's corporate culture, procurement, marketing and manufacturing operations
as well as overseas Toyota Production System (TPS) training, and best practice benchmarks for
a year.
• Samsung also operate a local partner collaboration innovation school in China to assist local
partners in sharpening their performance by training local technical experts and worksite managers.
• Samsung Electronics strategically operates internal and external education programs to foster a
globally competent workforce.
• Samsung HRD provides Leadership Development Centre (SLDC) that propagates change and
innovation, Samsung Institute of Global Marketing (SIGM) that fosters marketing experts and
Samsung Advanced Technology Institute (SATTI) that nurture specialized technicians.
/
CROSS CULTURAL TRAINING TECHNIQUES FOR EXPATRIATE MANAGERS
(a) Documentary programmes: Trainees read about a foreign country's history, culture, institutions,
geography, and economics. Videotaped presentations are often used.
(b) Culture assimilation: Cultural familiarity is achieved through exposure to a series of simulated
intercultural incidents, or typical problem situations. This technique has been used to quickly train those
who are given short notice of a foreign assignment.
(c) Language instruction: Conversatio~al language _skills are taug~t throu~h a variety of methods.
In most multinational companies, executives learn var10us languages ma routme way, so that they can
be useful to the company in case of short-term foreign assignments.
• (d) Sensitivity training: Experiential exercises teach awareness of the impact of one's actions on
others.
(e) Field experience: Firsthand exposure to ethnic sub-cultures in one's own country or to foreign
cultures heightens awareness.
(t) Business basics: This covers negotiating cross-culturally, working with various types of clients,
making presentations etc.
+ Economic Factors and HR Practices
+ Differen~es in economic systems among countries also translate into inter country differences in HR
practices. In free enterprise systems, companies fo~us on cost cu~ing, enhancing shareholder value,
productivity etc. in socialist systems, the focus ~h1fts to prevention_ of ~nemployment, even at the
expense of efficiency. In labour surplus and ca~1tal_ hungry econon_11es hke India, upholding labour
laws, respecting political ideologies, and offering Jobs to econom1cally poor and under-priv ileged