Course Booket IHRM

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INTERNATIONAL HUMAN RESOURCE MANAGEMENT

HR SUBJECT SPECIALIZATION – MBA 933-18
MBA Batch 2018 – 2020 (MBA 4th semester – 2nd/Final Year)
Prepared by SHAMMI BHATIA

UGC-NET, MBA-HR&Operations
Head of Department
S.A.S.I.I.T&R Mohali
www.sasiitmohali.com
+91 9876614199
ssbhatiahrd@gmail.com
International Human Resource Management is a subject offered with/under HR

Specialization, to be studied by all in MBA 4 th semester. The subject is quite
general, easy to grasp, still easier/est to write in examination; giving huge space to
attempt guess work. The subject infact does not require a rigour preparation and
only expects basic understanding of vocabulary.
Knowledge of subject glossary will suffice the purpose.
3 important Things in this subject to be kept in mind:-

 Knowledge of the subject glossary/key terms will be important
 Good command over writing skills; presentation & content writing will
be important
 Writing the whole pages will be the only key to success
IHRM/MBA 4th sem Designed by Shammi Bhatia

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Subject Syllabus (University Scheme):-
Unit –I International Human Resource Management: Concept, Difference between

Domestic and International HRM, Variables that moderate difference between Domestic and
International HRM. Sustaining International Business Operations: Approaches to Staffing,
Transferring Staff for International Business Activities, Role of Expatriates and Non-
Expatriates, Role of the Corporate HR function Recruiting and Selection Staff for International
Assignments: Concepts, Issues in Staff Selection, Factors Moderating Performance, Selection
Criteria, Dual Career Couples and Role of Women in International Management.
Unit –II Re-entry and Career Issues: Concept and Repatriation Process, Individual
Reactions to Reentry, Multinational Responses, Designing a Repatriation Program. Training
and Development: Concept, Role of Expatriate Training, Expatriates or Local Managers,
Components of Effective Predeparture Training Programs, Effective of PreDeparture Training,
Developing Staff through International Assignments. Staffing and Training for Global
Operations, Global Staffing Choices, Dynamics of Cross-Cultural leadership, managing and
motivating multi culture Teams.
Unit –III Performance Management: Concept, Multinational Performance Management,

Performance Management of International Employees, Performance of Appraisal of
International Employees. Compensation: Concept and Objectives of International
Compensation, Key Components of an International Compensation Program, Approaches to
International Compensation.
Unit –IV Knowledge Transfer within a Multinational Company: Organizational

Knowledge and its Significance, Sources of Organizational Knowledge; Tacit and Explicit
Knowledge; HRM and Organizational Knowledge; Transfer of Knowledge between and within
organizations, Transfer of Knowledge within MNCs, Transfer of Knowledge across National
Borders, Transfer of Managerial Know-how and HRM across National Borders. Industrial
Relations: Key issues in International Industrial Relations, Trade Union and International
Industrial Relations, Responses of Trade Unions to Multinationals; Regional Integration: the
European Union, Issue of Social Dumping, Impact of Digital Economy. National Context of
HRM: HRM Practices in Japan, United Kingdom, United States, India and China.
*Highlighted/Underlined Topics are very important; Prepare them well!
5 Most Important Questions/Topics:-

1. Domestic and International HRM Concepts & Differences/Comparison
2. Expatriates and Repatriates (Issues & Concerns)
3. Cross Cultural Leadership
4. Tacit & Explicit Knowledge (Organizational Knowledge; Transfer Know-hows)
5. Key Issued in International HRM

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Subject Glossary/Key Terms
 Domestic HRM
 International HRM
 Expatriate
 Repatriate
 Staffing
 Dual Career Couples
 Cross-Cultural Leadership
 Performance Appraisal
 Compensation
 Tacit Knowledge
 Explicit Knowledge
 Managerial Know-how
 Social dumping
 Digital Economy
 Trade Union
 International Industrial Relations

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UNIT - 1
International HRM-Meaning, Concept, Definition & Introduction:-
International HRM is the process of acquiring, allocating, and utilizing human resources in
a global business to achieve the stated objectives. Because of global context, international HRM is the
interplay of three dimensions- HR activities, type of employees, and countries of operations.
International Human Resource Management (IHRM) can be defined as a set of activities targeting human
resource management at the international level. It strives to meet organizational objectives and achieve
competitive advantage over competitors at national and international level.
IHRM comprises of typical HRM functions such as recruitment, selection, training and development,
performance appraisal and dismissal done at the international level and additional exercises such as global
skills management, expatriate management and so on.
In short, IHRM is concerned with handling the human resources at Multinational Companies (MNCs) and
it includes managing three types of employees −
 Home country employees − Employees residing in the home country of the company where the
corporate head quarter is situated, for example, an Indian working in India for some company
whose headquarters are in India itself.
 Host country employees − Employees residing in the nation in which the subsidiary is located,
for example, an Indian working as an NRI in some foreign country.
 Third country employees − These are the employees who are not from home country or host
country but are employed at the additional or corporate headquarters.
For example, an Indian MNC, which has its corporate office in America, may employ a French person as
the CEO to the subsidiary. The Frenchman employed is a third country employee.
IHRM vs. HRM
There are many similarities between HRM at the national as well as international level. However, let us
have a look at the differences between them with the help of points given below −
 Domestic HRM takes place at the national level, that is, within a country and IHRM takes place
at the international level, that is, in between two or more than two countries.
 Domestic HRM is bothered about managing employees belonging to one nation and IHRM is
bothered about managing employees belonging the home country and host country as well as
third country employees.
 Domestic HRM is concerned with managing limited number of HRM activities at the national
level and IHRM is concerned with managing additional activities such as expatriate management.
 Domestic HRM is less complicated due to less imprint from the external environment. IHRM is
comparatively more complicated, as it is deeply affected by the external factors such as cultural
distance and institutional factors.
We can conclude that both IHRM and HRM share some grounds of similarities as well as dissimilarities,
but both have their own importance. Further, they contribute to the development of a country in a
combined manner.
Mark Mendenhall (2000) sought to be more specific by outlining a number of criteria relevant to a
definition of IHRM:
1. IHRM is concerned with HRM issues that cross national boundaries or are conducted in locations
other than the home country headquarters.
2. IHRM is concerned with the relationships between the HRM activities of organisations and the
foreign environments in which the organisations operate.
3. IHRM includes comparative HRM studies; e.g. differences in how companies in Japan, Thailand,
Austria and Switzerland plan for upgrading of employee skills and so on.
IHRM approaches

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Ethnocentric: key positions filled by nationals of parent company

Polycentric: host country nationals recruited to manage subsidiary in their own country
Geocentric: best people recruited, whatever their nationality
Regiocentric: best people recruited within region in which the subsidiary operates (e.g. EU, USA).
IHRM solutions
Choice of IHRM approach depends upon:
 Degree and type of internationalization
 Type of industry and markets served
 Characteristics of staff
 Cultural preferences.

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INTERNATIONAL HRM Vs DOMESTIC HRM Points of Differences:-

1. International HRM addresses a broader range of activities than domestic HRM. These include
international taxation, coordinating foreign currencies and exchange rates, international relocation,
international orientation for the employee posted abroad, etc.
2. Human resource managers working in an international environment face the problem of addressing HR
issues of employees belonging to more than one nationality. Hence, these HR managers need to set up
different HRM systems for different locations. Human resource managers in a domestic environment
administer HR programmes to employees belonging to a single nationality.
3. International HRM requires greater involvement in the personal life of employees. The HR manager of
an MNC must ensure that an executive posted to a foreign country understands all aspects of the
compensation package provided in the foreign assignment, such as cost of living, taxes, etc. The HR
manager needs to assess the readiness of the employee’s family to relocate, support the family in
adjusting to a foreign culture through cross-cultural training, and to help in admitting the children in
schools. The HR department may also need to take responsibility for children left behind in boarding
schools in the home country by the employees on foreign postings. In the domestic environment, the
involvement of the HR manager or department with an employee’s family is limited to providing family
insurance programmes or providing transport facilities in case of a domestic transfer.
4. There is heightened exposure to risks in international assignments. These risks include the health and
safety of the employee and family. A major aspect of risk relevant to IHRM today is possible terrorism.
Several MNCs must now consider this factor when deciding on international assignments for their
employees. Moreover, human and financial consequences of mistakes in IHRM are much more severe
than in domestic business. For example, if an executive posted abroad returns prematurely, it results in
high direct costs as well as indirect costs.
5. International HRM has to deal with more external factors than domestic HRM. For example,
government regulations about staffing practices in foreign locations, local codes of conduct, influence of
local religious groups, etc. If an American organization is sanctioned license by the Indian government to
set up its subsidiary in India, the American company is under legal obligations to provide employment to
local residents.

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6. International HRM Addresses a broad range of HRM activities. Whereas domestic HRM deals with
issues related to employees belonging to single nationality.
7. Greater exposure to risks in international assignments; human and financial consequences of mistakes
in IHRM are very severe.
DUAL CAREER COUPLES:-

According to Meier and Harding a dual career couple refers to two individuals in a relationship
each having a professional career. Partners abroad is determined by both career importance and
partner role salience
Dual career group can be defined as a marital couple where both partners are working
professionals. Dual career group helps in achieving the psychological as well as financial
satisfactions. Today people are more concern about increasing level of the responsibilities. They
are more committed to work and their personal growth as well. In other words, dual career group
represent the pair of young professionals both husband and wife. Now a day’s more dual career
groups are increasing because more females are highly committed for quality of work. It
provides economic freedom and better social status.
Role of Women in International Management:-
 Better educated and trained to take certain specific roles based upon – communication
skills, global conversation, business expansion and cultural adoption
 Innate traits helping women leaders to adapt and adopt challenges and issues related with
managing – personal and professional work life balance
 Expertise in dealing client/customer service in/across national and
international/transnational borders
 Having achieved higher qualifications to equip themselves to take challenging roles
where knowledge and expereince based upon domain is concerned
 Career conscious, perseverant and goal focused; to lead in dynamic situations, whether
optimal or adverse conditions
 Role of women has undergone a strategic transformation & has gone beyond business
boundaries. It includes a better sense of professional acumen.
UNIT II
EXPATRIATES & REPATRIATES:-
Expatriates and repatriates are key talent segments in today’s global mobile workforce. Expatriates are
employees leaving a country to go and work in another country, usually with the expectation of returning
to their home country, although some of them may opt for citizenship in their host country, if that is
allowed. For example, South African expatriates in countries such as the UK and USA can obtain
citizenship, while expatriates in the Middle East can not acquire citizenship and therefore are likely to
eventually return to South Africa.
Expatriates returning to their home countries are called repatriates. In other words, you are an expatriate
when you enter a new country for a work assignment, and you are a repatriate when you return to your
home country after the international assignment. Be that as it may, expatriates and repatriates are key
talent segments and they therefore need to be treasured for their specialised skills and international
knowledge and experience, as well as the sacrifice they were willing to undertake for these international
assignments.
REPATRIATION PROCESS:-

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DYNAMICS OF CROSS CULTURAL LEADERSHIP:-

It is the ability for someone to how treat- deal with others through- at different culture of mentioned
person origin culture
Cross-cultural psychology attempts to understand how individuals of different cultures interact with each
other.[1] Along these lines, cross-cultural leadership has developed as a way to understand leaders who
work in the newly globalized market. Today’s international organizations require leaders who can adjust
to different environments quickly and work with partners and employees of other cultures. [2] It cannot be
assumed that a manager who is successful in one country will be successful in another. [3][4]
Cross-cultural leadership has developed as a way to understand leaders who work in the newly
globalized market. Today's international organizations require leaders who can adjust to different
environments quickly and work with partners and employees of other cultures.
One of the key resources in an organisation is undoubtedly human resources. It is the management
structure that makes decisions concerning the management of people within the organisation, beginning
with employee remuneration, recruitment, job rotation, job description, training and more. Other than
these, for all organisational growth, cross-cultural communication has become essential both for local and
international operations. The primary prerequisite is for the workforce to work together to eliminate
conflicts for the interests of the organisation. Today the business environment has become multifaceted
and competitive, products have become knowledge-based and the workforce has become culturally
diverse. Rapid developments in technology, communication network and computing capabilities have
changed the communication within and among the organisational settings, consequently to employ human
resources with different ethnic and cultural backgrounds and education. As the workforce is becoming
more and more multicultural and diverse it is not only necessary for human resources to gain knowledge
of communication but also cross-cultural factors to achieve the objectives of the organisation successfully
Importance of cross-cultural leadership:-
There are two kinds of understanding of cross-cultural leadership. One is from the point of view of the
organization to understand the cross-cultural leadership, cross-cultural leadership is the leader in the
implementation of an organization constituted by the staff of different nationalities, different values and
different cultural backgrounds to guide and coordinate the behavior. From this perspective, cross-cultural
leadership is present in among the multinational and transnational organizations. In addition, an

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understanding from the perspective of cultural exchange and cultural changes, the cross-cultural
leadership as to adapt to a new wave of globalization and services worldwide wave of cultural leadership
activities. From this perspective, cross-cultural leadership is a unique phenomenon to test the ability of
leaders is able to lead and adapt the cultural challenges.
Because the cultural variances are knowledge so important for the multinational companies’ leadership
activities, it is significant for the leaders to develop good understanding about the key of different cultural
variances (Rupp, 2011). Furthermore, nation’s specific cultural attributes play an important role in
determining the selection of leadership style.
Challenge and application:-
Based on the previous studies, most of the suggestions for global leaders are relatively brief and
generalized, such as understanding and respecting other cultures or fulfilling the cultural gaps. They fail
to guide leaders in detail on how to behave and achieve these responsibilities. “With the acceleration of
business globalization, more and more academics have growing concerns about the way cultural
differences impact on leadership behaviours “(Littrell, 2002).
Grow up of cross-cultural leadership cause of the business internationalization and globalization, on the
one hand, it led to the spread of the advanced leadership concepts, but on the other hand, has also led to
some of the country’s leadership values began to decline. For example, in the process of
internationalization of Japanese companies, Japan’s traditional values in life is difficult to tune with the
wave of global leadership; In India, Nigeria and other developing countries, the concept of leadership has
become increasingly complex, the evaluation also shows the diversity of leadership performance and
leadership structure; even understanding of the leader is different in different countries. Global
Leadership and Robert House (2004) argue that as the globalization of business continues to increase in
the 21st century, organizations must consider the cultural differences. He also states that “as economic
borders come down, cultural barriers go up, thus presenting new challenges and opportunities for culture-
cultural leadership.”
The challenge of cross-cultural leadership is difficult in the world because of its diverse work force.
Different national cultures play a critical role in success effective leadership in international businesses.
The organizations are thus challenged by the cross-cultural leadership and needs to address the increasing
culture diversity. One of the major barriers in any cross-cultural leadership situation is for the members of
each cultural group to develop a full understanding of what leadership means to the other group. Some
people thought that the cross-cultural leadership would destroy their original leadership style and rules.
Hofstede (2003) has conducted a great number of empirical researches on the cultural differences and
summarized his six cultural dimension theory, which systematically examines the cultural variances.
Hofstede’s theories give an important guideline to the leaders let them to know the different cultures and
decide how to lead in the cross-cultural country in order to avoid the culture conflict in the international
leadership and success leading the teams.
The other challenge is in the different nation’s culture, the way of communication between leaders and
employees is also different. An example is the leader of the United States is usually directly, they will
point out the errors facing you directly, but the Japanese leaders tend to convey to indicate through pass
the notes. If there are any negative reviews, the leader just through colleagues to pass that. Sometimes, if
the leader doesn’t know the culture and leadership style in that country, it will engender the culture
conflict and problem. Today’s multinational corporations require leaders who have good ability to adapt
the cross-culture environments rapidly, and can effective work with partners and leading employees of
other cultures (Service and White, 2012).
As a result, the company changed the system of rationalization proposals to the collective
recommendation system, bonuses to the team, and it achieved good result. Visible, cross-cultural
leadership is a high reward demanding activities. According to Morrison (2000), the leaders should share
the information and knowledge about their own culture, and also need to know how to adapt to the other
cultures. Moreover, the leaders need to identify the gaps between different cultures and need to learn how
to bridge them to avoid the conflict. To improve leadership performance, cross-cultural leader must be

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able to get all kinds of information in a timely and smooth flow of feedback in order to adjust their
behavior.
GLOBE is a large research effort offering useful tools for understanding cultural effects and developing
the sensitivity to achieve leadership effectiveness in a global context. It was designed to investigate the
intricate effects of culture on business leadership and effectiveness, and the human impacts of societies
studied (House & Javidan, 2004). It aims to fulfill the substantial gap on cross-cultural factors affecting
organizational and leadership practices, by examining the roles of societal and organizational values. The
strengths of GLOBE research are giving leaders a good starting point to explore the knowledge of cross-
cultural leadership. More importantly, it also helps leaders to know effective behaviours in leadership
implementation and how to behave properly across cultural contexts.
Conclusion
The global venture problems occur because lack of leadership skills and knowledge in relating with the
people in different culture backgrounds. Integration of technologies, nations, cultures, relationships, and
interests continues to characterize the twenty-first century workplace (Potoker, 2011). “Leading across
cultures requires specific skills, and organizations should provide formal training along with expatriate
assignments to develop leaders who can achieve results in this demanding environment” (Mathis and
Jackson, 2013).
From the above analysis, in the 21st century, cause the globalization, the demand of cross-cultural leaders
will be more and more, and for leaders of today’s and tomorrow’s businesses, the ability to connect
people and leading successful teams in a cross-cultural environment is an important competency. The
organizations need to become more effective when they are able to identify and foster the appropriate
leader behaviors for the relevant cultural situation. The leader should know well about the difference of
the culture background in order to avoid the

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EXPATRIATE TRAINING:-
Concept & Roles:-
There are two types of training that expatriates need: hard skills and soft skills training. The hard skills
are technical areas that are specific to one’s job, such as virtuosity with computer programs like
PowerPoint or Excel. While these are certainly important, the “soft skills” training for expatriates can
be even more critical.
In advance of an employee actually moving to another country, the employee should learn at least the
basics of the other country’s language. Conversational Spanish, for example, will take a person a long
way in building a comfort level socially and professionally in South America. Native citizens definitely
appreciate a visitor’s attempt to learn to converse in the country’s native tongue.
Expatriates should also be educated about their adopted country’s culture and mores, both socially and
professionally. For example, when a colleague first moved to Japan she went to a native islander’s funeral
and wore a black suit. She noticed several attendess at the funeral staring and pointing at her! She later
discovered that white is the appropriate color to demonstrate mourning…black signifies joy in their
culture! She was embarrassed, and was sure she offended the deceased’s family.
Professionally, there is a lot to learn for expatriates. In some countries, it is customary to get to know
potential customers first and to build a relationship before business is ever discussed. In some areas of the

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world, one does not approach the top person in the organization to discuss a business deal. The business
conversation is handled by lower level managers.
The expatriate (and his or her family) also will need to have some education about exchange rates and the
currency of their adopted country.
Be sure to include spouses in at least some of the training. A large percentage of expatriate assignments
are unsuccessful because the wife or husband is not happy in the adopted country!
Shopping is different in many areas of the world than it is in the U.S. While most shoppers in the U.S. see
a sticker price and expect that’s the price they’ll pay, in many countries the stated price is merely a
starting point for negotiation. Vendors are offended if the potential buyer doesn’t engage in “haggling”
before purchase.
To summarize, in preparation for designing a training initiative for expatriates, you should consider the
adopted country’s:
 Language (formal, conversational, and regional differences)
 Cultural mores such as food, dress, and observance of holidays
 Currency and exchange rates
 Professional expectations such as interactions with high-level staff
The work on an international assignment usually starts long before the assignee arrives in the host
country, and even before (and after) the training proper. Following is a structured process that includes
six critical stages that can enhance the chances for a successful international assignment and
transformational experience.
Pre-program assessment and exploration: This includes An assessment of the expatriate’s and family
members’ background and prior international experience, understanding of the host culture, specific
goals/concerns, and personal tendencies should shape a customized expat and family training session.
Use of cultural intelligence tools, such as Culture Wise, enables expatriates and family members to
further assess their personal tendencies against the cultural tendencies of the host country. Further,
exploration of existing online cultural information featured in such tools provides the trainees a wealth of
questions to ask during the training session
Expat and family training program: This stage is designed to increase the assignees’ knowledge about
the host country, society, values, business culture, and day-to-day living. Completing such training should
result in significantly reduced risk of cultural misunderstandings and an enhanced cross-cultural
experience.
Host manager and team cultural briefing. This next stage is focused on the host country manager and
the team with whom the international assignee will be working, and provides insight into the cultural
values and norms of the assignee. Differences regarding communication and management style will be
identified, as well as different expectations. Ideally, this is an in-person training program, but when that is
not possible, online tools can be helpful.
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Project alignment meeting: After the expatriate and host organization have received critical information,
it is time for an exchange, either in person or via telephone or videoconference. A project alignment
meeting with the assignee and host manager should be held to discuss cultural differences that might
affect the success of the assignment, tools and techniques to prevent misunderstandings, and mutual
expectations of the assignee and the manager. This meeting typically includes discussions about
timelines, reporting strategies, and setting milestones.
In-country coaching: As soon as the expatriate arrives in the host country, new and unknown situations
inevitably occur. Therefore, an assignee should receive face-to-face or telephone coaching. A coach
monitors the assignee’s process during the assignment and captures experiences, case studies, and best
practices. In some cases, a coach observes the assignee’s activities, such as staff meetings, virtual
meetings, and other interactions between the assignee and team members. The number of coaching
sessions varies based on the assignment’s duration and participant’s needs.
Knowledge management process: Systematic and ongoing capture (and dissemination) of relevant
documentation and lessons learned from an expatriate assignment is invaluable to the assignee, future

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expatriates, and the organization as a whole. Knowledge management enables the organization to avoid
repetitive occurrences of known issues and over time, best practices and effective case studies are
developed.
Components of Effective Predeparture Training Programs:-

1. Cross-cultural awareness An employee entering a foreign location with no knowledge of its
surroundings or environment can experience severe culture shock.Culture: Characteristics of a group of
people that are similarBenefits of cross cultural training programs is to evoke awareness of a foreign
country’s policies and practices and to reduce anxiety of ambiguous situations.
2. Preliminary visits Expatriate physically visiting host country’ Will ensure:Genuine and first hand
experienceRealistically assess assignment compatibilityExperience host country business
contextIncrease cultural awarenessmust be well-organized and specificNot a ‘tourist’ experienceCost
and benefit
3. Language instructionEnglish is becoming a global language among business transactions.Most non-
English ( as a first language) countries all learn English as a second language to ensure they can
communicate with other countriesEnglish speaking countries tend to see themselves as superior as they
already speak English.Translation issues be aware that words in US/UK have a different word used in
Australia, which can relate to the culture of the two different countries
4. Day-to-day assistance before entering a foreign country, intercultural communication training (ICT) is
crucial.Individual skills and non-work factors are necessary to have after expatriates have arrived at the
foreign country.Assistance and support before and During the assignmentCompanies (specifically HR)

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need to have a greater involvement in their employees’ lives once they relocate to ensure the employee is
happy, healthy, secure and able to produce a positive return for the company=> The combination of all
four components of pre-departure training program will lead to a smooth transition to a foreign location
for the organization, the expatriate and their partner/family.Positive result for the
organizationStrengthen ties between the two braches/companies/countriesPositive experience for the
expatriate and their partner/family
(i) Parent Country National (PCN): When a company of a country recruits employee from its own
country is known as PCN. Here the country is called parent country.
Example: when a Bangladeshi international company, recruits employees from Bangladesh.
(ii) Host Country National (HCN): When a company of a country runs their business in another country
and recruits employees from that country then it is known as HCN. Here the second country is the host
country.
Example: when a Bangladeshi company runs their business in India and recruits Indian citizens for their
organization.
(iii) Third Country National (TCN): They are the citizens of one country employed by a company from
another country who worked in a third country.
Example: when a Bangladeshi firm recruits employee from India for their Canada branch.
Designing a Successful Repatriation Program:-
Make sure you’re sending the right people abroad. Carefully assess who will be successful. Don’t just
look at their technical skills; consider the employee and his family’s ability to adapt to a new culture.
• Clearly define the expat’s career goals before the overseas assignment begins and make sure the
goals reflect your company’s overall objectives. If the purpose of overseas assignments, for example, is
to give your company global reach, then view the trip as a stepping-stone toward that goal. Have a strong
sense of where the assignment will lead next for the employee.
Discuss the challenges of repatriation before the employee leaves. Let the expatriate know that coming
home can be difficult, and stress the importance of staying connected to the home office.
• Create a mentor program. Assign mentors before employees go abroad so they’re involved from the
start. The mentor should continue to help throughout the stay and for six months after employees return
home. If possible, mentors should be previous expats who worked in the same region as the employees
they are mentoring.
• Encourage expats to make regular visits to the home office through a home-leave policy. They can
reconnect with colleagues and new employees, and help prevent feeling “out of sight, out of mind.” Help
expats stay in the loop by including them in companywide e-mails and newsletters. Managers at home can
serve as advocates by looking for job openings and mentioning their names in discussions.

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• Understand and educate management on the challenges of repatriation. Recognize that when

returning home, repats can experience reverse culture shock. Look for symptoms, which include
boredom, withdrawal, feelings of frustration, and distancing from coworkers. Help repats by letting them
know they’re not alone and their feelings are normal.
• Find positions and activities that use repats’ new skills. Allow them to act as mentors, put them on
assignments in which they can interact with overseas colleagues, and encourage them to continue to learn
a foreign language or join a community organization related to the country where they lived.
• Provide support to the entire family. Help the repat’s spouse find a new job, and offer counseling to
the parents and children on readjusting to life after living abroad.
• Encourage repats to approach repatriation similarly to relocating overseas. Many people are well
prepared for their move abroad and expect that life will be different. Repats should have a similar mind-
set when they return home. They should approach it as another new adventure. Make sure that repats set
realistic goals, are aware of changes in their home offices, and reflect on personal changes and new
priorities.
• Once repats have returned home, offer a counseling program. Review their international experience
and discuss the challenges of repatriation both personally and professionally. Discuss with the repats how
their business has changed and how to capitalize on their global experience.
UNIT III
KEY COMPONENTS OF COMPENSATION - INTERNATIONAL HRM:-
Designing and developing a better compensation package for HR professionals for the international
assignments requires knowledge of taxation, employment laws, and foreign currency fluctuation by the
HR professionals. Moreover, the socioeconomic conditions of the country have to be taken into
consideration while developing a compensation package. It is easy to develop the compensation package
for the parent country national but difficult to manage the host and third country nationals. When a firm
develops international compensation policies, it tries to fulfills some broad objectives: The compensation
policy should be in line with the structure, business needs and overall strategy of the organization.
The policy should aim at attracting and retaining the best talent.
It should enhance employee satisfaction.
It should be clear in terms of understanding of the employees and also convenient to administer.
The employee also has a number of objectives that he wishes to achieve from the compensation policy of
the firm He expects proper compensation against his competency and performance level. He expects
substantial financial gain for his own comfort and for his family also. He expects his present and future
needs to be taken care of including children’s education, medical protection and housing facilities. The
policy should be progressive in nature.
7 Key Components of an International Compensation
1. Base salary
2. Foreign Service inducement/hardship premium:
3. Allowances:
4. Education Allowances for Children:
5. Relocation Allowances and Moving:
6. Tax Equalization Payments:
7. Spouse Assistance:
Components of an international compensation package, in addition to the normal salary and benefits
offered in the home country, frequently include the following. These components are discussed below:
Components:-
1. Base salary:
This term has a slightly different meaning in an international context than in a domestic one. In the latter
case, it denotes the amount of cash compensation that serves as a benchmark for other compensation
elements like bonus, social benefits. For the expatriate, it denotes the main component of a package of
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allowances directly related to the base salary and the basis for in-service benefits and pension
contributions. Base salary actually forms the foundation block of the international compensation.
For expatriates, the term base salary means the primary component of a package of allowances which are:
(a) Foreign service premium,
(b) Cost-of-living allowance,
(c) Housing and utility allowance,
(d) Basis for in-service benefits and pension contributions.
Base salary may be paid in home or local currency or in some hard currency like pound or dollar.
2. Foreign Service inducement/hardship premium:
This is a component of the total compensation package given to employees to encourage them to take up
foreign assignments. This is with the aim to compensate them for the possible hardships they may face
while being overseas. In this context, the definition of hardship, the eligibility criteria for premium and
the amount and timing of this payment are to be carefully considered. Such payments are normally made
in the form of a percentage of the salary and they vary depending upon the tenure and content of the
assignment. In addition, sometimes other differentials may be considered. For instance: if a host country’s
work week is longer that of the home country, a differential payment may be made in lieu of overtime.
Parent-country nationals often receive a salary premium as an inducement to accept a foreign assignment
or as compensation for any hardship caused by the transfer. Such payments vary depending upon the
assignment, actual hardship, tax paid to foreign governments and length of the assignment.
3. Allowances:
One of the most common kinds of allowance internationally is the Cost of Living Allowance (COLA). It
typically involves a payment to compensate for the differences in the cost of living between the two
countries resulting in an eventual difference in the expenditure made. A typical example is to compensate
for the inflation differential. COLA also includes payments for housing and other utilities, and also
personal income tax. Other major allowances that are often made are:
 Home leave allowance
 Education allowance
 Relocation allowance
 Spouse assistance (compensates for the loss of income due to spouse losing their job)
Thus, multinationals normally pay these allowances to encourage employees to take up
international assignments to make sure that they are comfortable in the host country in
comparison to the parent country.
Various allowances are paid to expatriates depending upon the assignment. They include:
(a) The cost-of-living allowance (COLA):
It involves a payment to compensate the differences in expenditures between the home country and the
foreign country.
(b) Housing allowance:
Implies that employees should be entitled to maintain their home-country living standards (or, in some
cases, receive accommodations)
(c) Home leaves and travel allowances:
Is given to cover the expense of trips (usually once in a year) back home. These trips allow the expatriates
the opportunity to renew family and business ties, thereby helping them to avoid adjustment problems
when they are repatriated.
BENEFITS:-
The aspect of benefits is often very complicated to deal with. For instance, pension plans normally differ
from country to country due to difference in national practices. Thus all these and other benefits (medical
coverage, social security) are difficult to imitate across countries.
Thus, firms need to address a number of issues when considering what benefits to give and how to give
them. However, the crucial issue that remains to be dealt with is whether the expatriates should be

19
covered under the home country benefit programmes or the ones of the host country. As a matter of fact,
most US officials are covered by their home country benefit programmes. Other kinds of benefits that are
offered are:
Vacation and special leaves
Rest and rehabilitation leaves
Emergency provisions like death or illness in the family
These benefits, however, depend on the host country regulations.
4. Education Allowances for Children:
Education allowances are given towards fees for the education of expatriates’ children. Education
allowances include items such as tuition, language class tuition, books, transportation and uniforms.
5. Relocation Allowances and Moving:
Relocation allowances usually cover moving, shipping; temporary living expenses, and down payments
or lease-related charges.
6. Tax Equalisation Payments:
Many international compensation plans attempt to protect the expatriate from negative tax consequences
by using a tax equalisation plan. Under this plan, the company adjusts an employee’s base income so that
the expatriates will not pay any more or less tax than if they had stayed in the home country.
7. Spouse Assistance:
To help guard against or offset income lost by an expatriate’s spouse as a result of relocating abroad.
Multinationals generally pay allowances in order to encourage employees to take up international
assignments.
5. Incentives
In recent years some MNC have been designing special incentives programmes for keeping expatriate
motivated. In the process a growing number of firms have dropped the ongoing premium for overseas
assignment and replaced it with on time lump-sum premium. The lump-sum payment has at least three
advantages. First expatriates realize that they are paid this only once and that too when they accept an
overseas assignment. So the payment tends to retain its motivational value. Second, costs to the company
are less because there is only one payment and no future financial commitment. This is so because
incentive is separate payment, distinguishable for a regular pay and it is more readily for saving or
spending.
6. Taxes
The final component of the expatriate’s compensation relates to taxes. MNCs generally select one of the
following approaches to handle international taxation.
Tax equalization: – Firm withhold an amount equal to the home country tax obligation of the expatriate
and pay all taxes in the host country.
Tax Protection:- The employee pays up to the amount of taxes he or she would pay on remuneration in
the home country. In such a situation, The employee is entitled to any windfall received if total taxes are
less in the foreign country then in the home country.
7. Long Term Benefits or Stock Benefits
The most common long term benefits offered to employees of MNCs are Employee Stock Option
Schemes (ESOS). Traditionally ESOS were used as means to reward top management or key people of
the MNCs. Some of the commonly used stock option schemes are:
Employee Stock Option Plan (ESOP)- a certain nos. of shares are reserved for purchase and issuance to
key employees. Such shares serve as incentive for employees to build long term value for the company.
Restricted Stock Unit (RSU) – This is a plan established by a company, wherein units of stocks are
provided with restrictions on when they can be exercised. It is usually issued as partial compensation for
employees. The restrictions generally lifts in 3-5 years when the stock vests.
Employee Stock Purchase Plan (ESPP) – This is a plan wherein the company sells shares to its employees
usually, at a discount. Importantly, the company deducts the purchase price of these shares every month
from the employee’s salary.

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Hence, the primary objective for providing stock options is to reward and improve employee’s
performance and /or attract / retain critical talent in the Organization.
MUILTINATIONAL PERFORMANCE MANAGEMENT Introduction to Concept:-
It is the process of assessing an individual's performance in a systematic way. ... IHRM is a process “that
enables the multinational to evaluate and continuously improve individual, subsidiary unit and
corporate performance, against clearly defined, pre-set goals and targets”.

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PERFORMANCE APPRAISAL OF INTERNATIONAL EMPLOYEES :-

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UNIT IV
ORGANIZATIONAL KNOWLEDGE:-
Organizational knowledge is the collective knowledge and abilities possessed by the people who belong
to an organization. By definition, knowledge is a living type of information that is actively
communicated and used by people. Organizational knowledge can be difficult to transfer and retain.
Organizational knowledge is the sum of all knowledge contained within an organization that can provide
business value. It may be gained from intellectual property, product knowledge, lessons of failure and
success, conferences, or customer communications, just to name a few sources. Knowledge is always
learned, preserved, and transmitted by people, so it’s the key responsibility of Human Resources (HR) to
help manage this knowledge.
Organizational Knowledge Resources
Business knowledge can exist on several different levels:
Individual: Personal, often tacit knowledge/know-how of some sort. It can also be explicit, but it must be
individual in nature, e.g. a private notebook.
Groups/community: Knowledge held in groups but not shared with the rest of the organization.
Companies usually consist of communities (most often informally created) which are linked together by
common practice. These communities of practice (Lave & Wenger 1991) may share common values,
language, procedures, know-how, etc. They are a source of learning and a repository for tacit, explicit,
and embedded knowledge.

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Structural: Embedded knowledge found in processes, culture, etc. This may be understood by many or
very few members of the organization. E.g. the knowledge embedded in the routines used by the army
may not be known by the soldiers who follow these routines. At times, structural knowledge may be the
remnant of past, otherwise long forgotten lessons, where the knowledge of this lesson exists exclusively
in the process itself.
Organizational: The definition of organizational knowledge is yet another concept that has very little
consensus within literature. Variations include the extent to which the knowledge is spread within the
organization, as well as the actual make-up of this knowledge. Hatch (2010) defines it as: "When group
knowledge from several subunits or groups is combined and used to create new knowledge, the resulting
tacit and explicit knowledge can be called organizational knowledge. A very common solution is to use
something like Microsoft Sharepoint or Helpjuice's Internal Knowledge Base Software"
Others present a broader perspective: "individual knowledge, shared knowledge, and objectified
knowledge are different aspects or views of organizational knowledge" (Ekinge & Lennartsson 2000). As
always, texts emphasizing an IT based outlook once again offer shallower, information-based definitions,
e.g. Virvou & Nakamura 2008, "Information internalized by means of research, study or experience that
has value to the organization".
For the purpose of this site I will adopt a broad, knowledge-based perspective. Organizational knowledge
is therefore defined as: all the knowledge resources within an organization that can be realistically
tapped by that organization. It can therefore reside in individuals and groups, or exist at the
organizational level.
Extra-organizational: Defined here as: Knowledge resources existing outside the organization which
could be used to enhance the performance of the organization. They include explicit elements like
publications, as well as tacit elements found in communities of practice that span beyond the
organization's borders.
Implications for KM
In order to enhance organisational knowledge, KM must therefore be involved across the entire
knowledge spectrum. It must help knowledge development at all levels and facilitate & promote its
diffusion to individuals, groups, and/or across the entire firm, in accordance with the organization's
requirements. KM must manage organizational knowledge storage and retrieval capabilities, and create an
environment conducive to learning and knowledge sharing. Similarly it must be involved in tapping
external sources of knowledge whenever these are necessary for the development of the organizational
knowledge resources.
To a large degree, KM is therefore dependent on the understanding and management of organizational
learning, organizational memory, knowledge sharing, knowledge creation, and organizational culture.
Types of Knowledge:-
Knowledge can be divided into three main types:
Explicit Knowledge
Explicit knowledge is easily documented and indisputable, like procedures and policies, product and
service functionality, step-by-step tasks, research, and content. It’s most likely to be documented by
technical writers, content strategists, instructional designers, and information architects.
Tacit Knowledge
Tacit knowledge is a learned sense of practical know-how, which is hard to articulate, such as how to
repair a computer system. It’s the realm of your subject matter experts; held inside your employees’
heads; and transmitted through training, mentorships, and communities of practice. According to Nonaka
& Takeuchi, “Tacit Knowledge is the knowledge of experience, and tends to be subjective and physical. It
is about ‘here and now’, relates to a specific practical context.”
Implicit Knowledge
Implicit knowledge, or embedded knowledge, is intuitive and embedded experience. It’s ineffable, but
you know it when you see it, such as the experience of senior employees, subject matter experts, the
nature of professional relationships, and institutional processes. It’s transmitted through social
relationships.

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Organizational knowledge is equated with professional intellect (Quinn, Philip, & Sydney,
1996). Organizational knowledge is a metaphor, as it is not the organization but the people in the
organization who create knowledge2.
The body of knowledge contained, but not categorized, within the members of an organization. 3.
The organizational knowledge is created and transferred within the organizational context, is rooted in:
(1) company and industrial atmosphere (King & Zeithaml, 2003),
(2) Tacit knowledge (Grant, 2002); and is fitted in firm culture (Saint-Onge, 1996). Has the following
properties: (1) is shared between the members of the organization (2) is connected to organization history,
and (3) Allows a common language. 4. The process of generating, sharing and utilizing knowledge in
organizations; organizational knowledge develops from the interaction mechanisms between members
of the organization. 5. Organizational information socially believed as justified truth and stored
in organizational memory through organizational learning and that can be recalled as needed by any
agent (e.g. individuals, automatic processes) in the organization.
Transfer of knowledge (based on an individual’s learning and experiences, and their application to
solving work-related problems) from an individual to the organization, so that the organization rather than
the individual owns it, and it has value for an organization to repackage as a service or offering.
Tacit and explicit knowledge that is part of the organization’s culture and identity, routines, standard
operating procedures, and is expressed in documents
Sources of Knowledge
Organizational knowledge can be based on: –
Internal sources (e.g., intellectual property; knowledge gained from experience; lessons learned from
failures and successful projects; capturing and sharing undocumented knowledge and experience; the
results of improvements in processes, products, and services); –
External sources (e.g., standards; academia; conferences; gathering knowledge from customers or
external providers)
Now that we know what types of knowledge to look out for, we’ll go through potential sources of
knowledge. Knowledge can be found almost anywhere in your organization and comes in many tangible
and intangible forms. For example:
 Individual—a person’s notebook, loose documents and files, customer queries and complaints,
or an individual’s memory. These are good sources of tacit knowledge.
 Group/Community—communities of practice, communities of excellence, project teams,
internal teams, training groups, mentorship programs. These are good sources of explicit,
implicit, and tacit knowledge.
 Structural—routines, processes, culture, traditional ways of doing things, IT systems, suppliers.
These are sources of implicit knowledge.
 Organizational memory—the knowledge of your entire organization. It can be contained in
guidelines, regulations, reports, market research, records, and data. These are good sources for a
combination of tacit and explicit knowledge.
 Explicit Knowledge: Knowledge that is easy to articulate, write down, and share. Explicit
knowledge is the most basic form of knowledge and is easy to pass along because it’s written
down and accessible. When data is processed, organized, structured, and interpreted, the result is
explicit knowledge. Explicit knowledge is easily articulated, recorded, communicated, and most
importantly in the world of knowledge management, stored.
If you need an example of explicit knowledge, simply open your knowledge management
platform and take a look around. Your company data sheets, white papers, research reports, etc.
are all explicit company knowledge.
 Implicit Knowledge: The application of explicit knowledge. Skills that are transferable
from one job to another are one example of implicit knowledge.

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Implicit knowledge is the practical application of explicit knowledge. There are likely instances
of implicit knowledge all around your organization. For example, consider asking a team member
how to perform a task. This could spark a conversation about the range of options to perform the
task, as well as the potential outcomes, leading to a thoughtful process to determine the best
course of action. It is that team member’s implicit knowledge that educates the conversation of
how to do something and what could happen. Additionally, best practices and skills that are
transferable from job to job are examples of implicit knowledge.
 Tacit Knowledge: Knowledge gained from personal experience that is more difficult to express.
Tacit knowledge is the knowledge that we possess that is garnered from personal experience and
context. It’s the information that, if asked, would be the most difficult to write down, articulate,
or present in a tangible form. As an example, think of learning how to make your grandmother’s
famous recipes. Sure, she gave you the recipe card, but when you try it on your own you feel as if
something is missing. After years of experience, she has learned the exact feel for the dough, or
exactly how long something should be in the oven. It’s not something she can write down; she
can just feel it. In the workplace, tacit knowledge is the application of implicit knowledge that’s
specific to your company. As employees move from job to job, the application of their implicit
knowledge will change based on what’s unique about your business. An example of this is a sales
rep that can not only give a great demo but has also learned specific buying signs while talking to
prospects.
 Tacit knowledge (knowing-how): knowledge embedded in the human mind through experience
and jobs. Know-how and learning embedded within the minds of people. Personal wisdom and
experience, context-specific, more difficult to extract and codify. Tacit knowledge Includes
insights, intuitions.
 Explicit knowledge (knowing-that): knowledge codified and digitized in books, documents,
reports, memos, etc. Documented information that can facilitate action. Knowledge what is easily
identified, articulated, shared and employed.
 Thus, explicit (already codified) and tacit (embedded in the mind).
Explicit knowledge Tacit (implicit) knowledge

Objective, rational, technical Subjective, cognitive, experiential learning
Structured Personal
Fixed content Context sensitive/specific
Context independent Dynamically created
Externalized Internalized
Easily documented Difficult to capture and codify
Easy to codify Difficult to share
Easy to share Has high value
Easily transferred/ taught/learned Hard to document
Exists in high volumes Hard to transfer/teach/learn
Involves a lot of human interpretation

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HRM & ORGANIZATIONAL KNOWLEDGE:-

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TRANSFER OF MANAGERIAL KNOW-HOW:-

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Managerial Know how is essentially a set of skills, information and expertise gained by a manager across
his work domain over the time and with accumulation of expereince.
This expresses his competency, strength & potential as far as his job area of work-profile is concerned.
Managerial Know How Transfer, also known as Knowledge transfer refers to sharing or
disseminating of knowledge and providing inputs to problem solving In organizational theory, knowledge
transfer is the practical problem of transferring knowledge from one part of the organization to another.
Like knowledge management, knowledge transfer seeks to organize, create, capture or distribute
knowledge and ensure its availability for future users. It is considered to be more than just
a communication problem. If it were merely that, then a memorandum, an e-mail or a meeting would
accomplish the knowledge transfer. Knowledge transfer is more complex because:
 knowledge resides in organizational members, tools, tasks, and their sub networks and
 much knowledge in organizations is tacit or hard to articulate.
The subject has been taken up under the title of knowledge management since the 1990s. The term has
also been applied to the transfer of knowledge being transferred at the international level.
In business, knowledge transfer now has become a common topic in mergers and acquisitions. It focuses
on transferring technological platform, market experience, managerial expertise, advance corporate
culture, and other intellectual capital that can improve the companies' competence. Since technical skills
and knowledge are very important assets for firms' competence in the global competition, unsuccessful
knowledge transfer will have a negative impact to the corporations and leads to the expensive and time-
consuming M&A not creating values to the firms.
Types of knowledge:-
Knowledge is a dominant feature in our post-industrial society, and knowledge workers are important in
many enterprises. Blackler expands on a categorization of knowledge types that were suggested by
Collins (1993):
 Embrained knowledge is that which is dependent on conceptual skills and cognitive abilities.
We could consider this to be practical, high-level knowledge, where objectives are met through
perpetual recognition and revamping. Tacit knowledge may also be embrained, even though it is
mainly subconscious.
 Embodied knowledge is action oriented and consists of contextual practices. It is more of a
social acquisition; as how individuals interact in and interpret their environment creates this non-
explicit type of knowledge.
 Encultured knowledge is the process of achieving shared understandings through socialization
and acculturation. Language and negotiation become the discourse of this type of knowledge in
an enterprise.
 Embedded knowledge is tacit and resides within systematic routines. It relates to the
relationships between roles, technologies, formal procedures and emergent routines within a
complex system. In order to initiate any specific line of business knowledge transition helps a lot.
 Encoded knowledge is information that is conveyed in signs and symbols (books, manuals, data
bases, etc.) and decontextualized into codes of practice. Rather than being a specific type of
knowledge, it deals more with the transmission, storage and interrogation of knowledge.
Challenges:-
What complicates knowledge transfer? There are many factors, including:
 The inability to recognize & articulate "compiled" or highly intuitive competencies - tacit
knowledge idea
 Different views on explicitness of knowledge
 Geography or distance
 Limitations of Information and Communication Technologies (ICTs)
 Lack of a shared/superordinate social identity
 Language
 Areas of expertise
 Internal conflicts (for example, professional territoriality)

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 Generational differences
 Union-management relations
 Incentives
 Problems with sharing beliefs, assumptions, heuristics and cultural norms.
 The use of visual representations to transfer knowledge (Knowledge visualization)
 Previous exposure or experience with something
 Misconceptions
 Faulty information
 Organizational culture non-conducive to knowledge sharing (the "Knowledge is power" culture)
 Motivational issues, such as resistance to change and power struggles
 Lack of trust
 Capabilities of the receptor to interpret and absorb knowledge
 Context of the knowledge (tacit, context-specific knowledge)
Everett Rogers pioneered diffusion of innovations theory, presenting a research-based model for how and
why individuals and social networks adopt new ideas, practices and products. In anthropology, the
concept of diffusion also explores the spread of ideas among cultures.
Process:-
 Identifying the knowledge holders within the organization
 Motivating them to share
 Designing a sharing mechanism to facilitate the transfer
 Executing the transfer plan
 Measuring to ensure the transfer
 Applying the knowledge transferred
 Monitoring and Evaluate
ISSUES IN INTERNATIONAL INDUSTRIAL RELATIONS:-
Issue 1: Who should handle Labour Relations – Headquarter or the subsidiary in the concerned
country
The national dissimilarities in economics, political, and legal systems create diverse labour-relations
system across countries, MNCs HQs typically delegate the control over labour relations to their foreign
subsidiaries. Having said that, the participation of the MNC headquarters in host-country labour relations
is impacted by 4 key elements:
1. In case there is a high level of inter-subsidiary production integration, the labour relations function is
centralized and is coordinated by the head quarter.
2. The nationality of ownership of the subsidiary has an influence on who should take care of employee
relations.
3. Furthermore, subsidiary character has a bearing on who should deal with employee relations.
4. Finally, where a subsidiary is dependent more on its parent company for resources, you will see a
greater corporate involvement in labour relations.
Issue 2: Trade Union Tactics
Trade Unions make use of a number of tactics to deal with international business:
1. The most common one is ‘strike’. A strike is a concerted and temporary suspension of work, intended
to put pressure. Unions should be cautions prior to resorting to a strike in international scenario because
the bargaining power of a union could possibly be threatened or weakened by the financial resources of
an MNC. This is especially evident where a multinational firm uses transnational sourcing and cross
subsidization of its products or parts across different international locations.
2. Form International Trade Secretariats (ITSs): There are Fifteen ITSs who help the exchange of
information. Main objective of ITSs is to accomplish transactional bargaining with the MNCs.
3. Lobbing for limited national legislations – Trade unions have for several years lobbied for restrictive
national legislation in the U.S. and Europe. Trade unions pursue restrictive national legislation to avoid
the export of jobs via multinational investment policies.

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4. Intervention from the global body like ILO, UNCTAD, EU, OECD: ILO has issued guidelines which
cover disclosure of information, competition, financing, employment, industrial relations, taxation,
science and technology.
Issue 3: Political
There is little doubt that national industrial relations (IR) systems continue to be greatly different. There
are 3 faces of industrial relations which the international union movement encounters in the international
environment, specifically social democracy, neo-liberal and authoritarian. The dissimilarities in national
industrial relations systems are also mirrored in the structure, power and status of individual actors in the
system. For example trade unions maintain a comparatively strong position within the Scandinavian IR
model while their role is a lot more limited in the US context. The international labour movement is
usually prohibited direct access to robust intergovernmental establishments like the WTO. So they have to
depend on national government to represent their interests to these institutions. Significantly, the interests
of government might not always be directly in-line with the union movement.
Issue 4: Social and Identity
A key problem with the international labour movement and specifically international collective
bargaining is the absence of identity that individual workers have with their international
associates. Additionally they see these peak associations to be a lot more conservative than activists at the
local level. Associated with this point, there is a common lack of solidarity between actors at a national
level. Additionally, there are endemic cultural, social and language differences among individuals in
different countries resulting in lowering the degree of a shared identity between workers on an
international level.

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SOCIAL DUMPING:-
Increased labour immigration has led to problems with social dumping in some industries. Social
dumping is deemed to be present both if foreign employees are subject to breaches of health, safety and
working environment regulations and if they are paid wages that are unacceptably low.
Social dumping is about reducing labour costs using illegal and exploitative practices. It primarily
concerns sectors such as agriculture, construction, catering, transport, heath and domestic services.
Social dumping is a practice of employers to use cheaper labour than is usually available at their site of
production or sale. In the latter case, migrant workers are employed; in the former, production is moved
to a low-wage country or area. The company will thus save money and potentially increase its profit.
Systemic criticism suggests that as a result, governments are tempted to enter a so-called social policy
regime competition by reducing their labour and social standards to ease labour costs on enterprises and
to retain business activity within their jurisdiction.
There is a controversy around whether social dumping takes advantage of an EU directive on internal
markets, the Bolkestein directive.
Entities losing from social dumping:
 Employees in exporting countries
 Child labor in exporting countries
 Industry and environment in exporting country
 Government in exporting countries
 Employees in importing countries
 Shareholders of the company in importing countries
Entities gaining from social dumping:
 Companies in importing country
 Shareholders in importing country
 Customers in importing country
 Industry in importing market

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 Employment in exporting country

 Government and investment in exporting country
Major Issues circumventing SOCIAL DUMPING:-

 Exploitative undefined policies and practices across regions
 Unfair & unethical trade and labour practices; with weak legal enactments to curb such practices
 Huge differences in conditions of working, standards of life, safety and security
 Lack of resources, low wages, under privileged conditions
 Socio-economic inacceptance, inaptness and incompetency
 Language, religion, race, caste, ethnical barriers
 Low educational know-hows
 Disparity in facilities and amenities being offered for similar jobs/work in home / parent nations.
HRM Practices in – JAPAN, USA, UK, CHINA & INDIA:-
Managing their human resources effectively is always a key concern for organisations as it is something
that has a direct impact on the bottom line. The discipline of HRM (Human Resources Management) has
therefore been of great interest to practitioners and scholars all over the world. Distinct HRM practices
are often found in different countries because of differences in culture, social setup, and political and
economic environments. In this essay we will discuss and compare the HRM practices in two of the
world’s most developed economies – USA and Japan. Then we will evaluate the reasons for the
differences and look at how despite the differences both countries have managed to achieve the common
status of economic superpower. This will be done by looking at various aspects such as ideological and
cultural values, demographics and employment, HR policies, the vole of the state and degree of worker
representation and collective bargaining systems. The comparative discussion will focus on how these
aspects have influenced the shaping of HRM practices in both countries and how these policies are
expected to evolve further in the future.
Influence of ideological and cultural values
If we compare the ideological and cultural values of people in Japan and the USA, we will find that the
Japanese have always believed and still to a greater degree hold on to their ideology of collectivism.
Group welfare, co-operation and value of relationships take priority over individual benefits. The
Japanese tend to be quite conservative and emotional and believe in co-operation and joint efforts to solve
problems. These values can be traced back to ancient times when they lived in close groups of small
tribes and villages. In contrast Americans believe in individuality and people are encouraged to become
independent early. Americans prefer more privacy and like spending time alone working to achieve their
individual goals and objectives. Holding on to traditional values is considered outdated and changes in
thoughts and beliefs is seen as a sign of progress. A possible reason for this lies in the fact that society in
the USA is made up of diverse ethnic groups and people from different cultures, unlike Japan.
Demographics and employment aspects
If we look at the demographics and population statistics, Japan is a country with a high population
density. Around 77% of the population lives in only 16% of the land area, as most of the region comprises
of hills and mountains. The population at the end of 2004 was about 128 million. More than 95% are
Japanese and the rest comprises of mostly Koreans and some Chinese and minority groups. Around 65%
of the population falls in the economic active age group of 15-64 years. In comparison the USA at present
(March 2005) has a population of around 296 million but has a low population density due to its large
size. The population compared to Japan is very diverse, with around 75% of population comprising of
white, 12.5% black and around 12.5% of races other than white or black. However, similar to Japan, USA
also has around 67% of the population in the age group of 15-64 years.
The unemployment rate in Japan has increased from around 2.1% in the 1990s to 4.7% in February 2005,
which is slightly lower than the 5.4% in USA. Around 63 million people (about 49% of the population) in
Japan are employed of which around 72% are regular permanent employees, 10% are temporary
employees, 11% are self-employed and the remaining 7% comprises of family workers and workers on

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daily wages. In terms of industry the 18.7% of people in 2003 were working in manufacturing, followed
by 17.9% in wholesale and retail and 13.4% in services. In the USA the number of people employed in
the population is more than 140 million, which is around 48% of the total population and quite similar to
Japan. This similarity is also because both the countries have almost equal percentages of the population
falling in the working age group. The highest percentage (34%) of the employed people in the USA work
in management and professional services. This indicates the reason behind the greater number of
entrepreneurs in the USA as compared to Japan, where the highest percentage, 22.8%, of the workforce
consists of manufacturing and construction workers.
HR policies and management structure
Employment in Japanese organisations and companies offers great stability and security. People often
work for the same company all their life. However the concept of lifetime employment is gradually
decreasing due to economic pressures and increasing western influence. The structure of the labour
market is also showing changes with increasing number of female and foreign national employees as well
as rising education levels in employees. Also there is a shift in youngsters towards careers that offer more
creativity and individuality. On the other hand, for workers in the USA, there is no such thing as stability
and security in employment. In fact, employees themselves do not prefer working for the same company
for many years. Switching jobs in two to three years is quite common and people think more of their own
goals and aspirations than those of the organisation.
In terms of recruitment, companies in Japan tend to recruit a large number of new school graduates. Large
companies are generally able to attract more graduates by offering them higher wages and benefits and
often SMEs have a difficult time in attracting young staff. In the USA big MNCs are generally able to
attract most of the graduates from good universities and colleges. However, graduates in the USA also
prefer working for smaller firms, where they can get more responsibility early in their careers. Also the
working atmosphere in companies in the USA is very informal and direct as compared to companies in
Japan where a greater degree of hierarchy still exists. This again reflects the greater importance of
interdependence and relationships in Japanese culture as compared to independence and performance in
the USA.
The industry average monthly cash earnings of regular employees in Japan was Yen 390,000 in 2003.
This has declined from Yen 398,000 in 2000. The average monthly earnings have increased for
employees working in manufacturing and electricity, gas, heat supply and water industries but has
decreased for workers in most industries including services, finance, wholesale and retail as well as
construction and transportation. The average salary in USA in 2003 was around US$ 3300 per month
which is a little less, but competitive with Japan. In the USA the salary for people employed in
professional services and management sectors had increased marginally as compared to stagnancy and
decrease in salary in other sectors.
Role of the State
The involvement of state in the Japanese economy is relatively high when it comes to protection from
foreign competition and in the area of Research and Development activities. The USA in comparison is
far more liberalised and offers greater opportunity for free competition. From a legal point of view,
employment relations in the USA is regulated by the National System of Labour Laws which comprises
mainly of the Wagner Act, Taft-Hartley Act and Landrum-Griffin Act. There are no specific labour rights
or standards mentioned in the Constitution but there is a National Labour Relations Board to deal with
such issues. In Japan the Ministry of Labour is responsible for issues related to employment and labour
welfare. Strikes and work disputes are very rare in Japanese companies, probably due to the strong sense
of community within the organisations and also due to the fact that the Japanese mostly try to avoid
conflicts and disputes. However, in unavoidable circumstances issues are sorted out by arbitration
procedures at local and regional levels. In comparison, work related disputes are more common in the
USA with matters often being dragged to the court rooms to reach settlements.
Worker representation and consultation
The most common Japanese employee representation systems are the enterprise or company unions. This,
however, is usually found in large and medium size companies and not in small firms. A collective

34
representation system is mostly missing in smaller firms and surprisingly there is a sharp division
between employees of large organisations and their colleagues working in smaller companies. Labour
unions of large companies generally do not provide support to workers in small companies. Also the
working conditions in small enterprises in Japan are not as ideal if compared to small enterprises in the
USA. This is the main reason why small companies in Japan are unable to attract and recruit young
skilled workers as opposed to companies in USA. The wages and benefits available to workers in small
companies in the USA are more attractive compared to that provided by small firms in Japan. However,
similar to Japan, in the USA employees of large organisations are more likely to be under a collective
representation system than employees in smaller companies. In fact, even in large organisations,
collective bargaining and representation is much less prevalent as compared to Japan, probably due to the
greater emphasis on individuality and independence. Thus in most instances employment terms are
negotiated on an individual basis between the employer and the employee.
In conclusion it can be stated that both Japan and USA exhibit very distinct practices in human resource
management, and yet both the economies have been equally successful.
Useful lessons can be learnt from the Japanese culture such as how teamwork can be used effectively to
overcome big problems and also the value of co-operation in the work place. However, looking at the
present scenario and in terms of how things are expected to shape up in the future, the HR practices based
on the individualistic approach in the USA are expected to gain more popularity as compared to those
based on the ideology of collectivism in Japan.
The influences of Chinese institutional and cultural factors
In the human resources management practice, the management style of leadership is directly related to the
implementation of the human resource management. Hofstede points that the impact factors influencing
the enterprise leadership are "individualism and collectivism" and "the degree of accepting power
distance". The United States is a country with the highest individualism, so American leadership theory is
based on the leader's pursuit of private interests. However, the American leadership theory is not
applicable in China, because China belongs to collective social, the worker concern groups, hope to
obtain the safeguard from the group, and are willing to use group loyalty as reward. Hofstede thinks the
degree of accepting power distance directly affect the realization of staff's participation in management.
China's degree of accepting power distance is very high, so people are not involved in management, it is
rarely that workers participate in management of enterprises. The conversion process of human resource
practice in a multinational company, the multinational company should adopt suitable leadership to adapt
to Chinese culture and system (Kirkman, Lowe & Gibson, 2006).
The biggest influence factor to the enterprise organization structure is the degree of accepting power
distance and the degree of uncertainty avoidance. This is because the organization's main function is the
distribution of power and to reduce or prevent the uncertainty of the business. Because of the high degree
of accepting power distance, and urgent requirements to prevent the uncertainty in the business, so China
tends to ''pyramid" type of traditional hierarchy. In the designing organization structure of multinational
companies operating in China, the human resource management needs to take the high degree of
accepting power distance and the high degree of uncertainty avoidance existing in Chinese culture into
account (Farh & Cheng, 2000).
In the human resource practice, staff incentive is a very important content. The greatest impact factor to
the content of enterprise incentive is "individualism and collectivism", "the degree to prevent the
uncertainty" and "masculine and feminine". The United States is the country with high degree
individualism, so the incentive methods that they use according to individual, based on personal self-
realization and personal gain dignity as the main content of the incentive. China is a country with high
degree of collectivism, so the incentive should focus on the relationship between the individual and the
collectism, too much reward to the individual is often won't work. Although China tend to "butch" but
psychology of prevent not positive is stronger, so a kind of no danger, very safe work became incentive
factor (Edwards & Kuruvilla, 2005).

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1

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Prepared by SHAMMI BHATIA

International Human Resource Management is a subject offered with/under HR

3 important Things in this subject to be kept in mind:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

Subject Syllabus (University Scheme):-

Unit –I International Human Resource Management: Concept, Difference between

Unit –III Performance Management: Concept, Multinational Performance Management,

Unit –IV Knowledge Transfer within a Multinational Company: Organizational

*Highlighted/Underlined Topics are very important; Prepare them well!

5 Most Important Questions/Topics:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

Subject Glossary/Key Terms

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

Ethnocentric: key positions filled by nationals of parent company

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

INTERNATIONAL HRM Vs DOMESTIC HRM Points of Differences:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

DUAL CAREER COUPLES:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

DYNAMICS OF CROSS CULTURAL LEADERSHIP:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

Components of Effective Predeparture Training Programs:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

• Understand and educate management on the challenges of repatriation. Recognize that when

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

PERFORMANCE APPRAISAL OF INTERNATIONAL EMPLOYEES :-

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

Explicit knowledge Tacit (implicit) knowledge

IHRM/MBA 4th sem Designed by Shammi Bhatia

HRM & ORGANIZATIONAL KNOWLEDGE:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

TRANSFER OF MANAGERIAL KNOW-HOW:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

 Employment in exporting country

Major Issues circumventing SOCIAL DUMPING:-

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

IHRM/MBA 4th sem Designed by Shammi Bhatia

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