EDM 603: Resource and Human

Relations Management

INTERNATIONAL
HUMAN RESOURCE
MANAGEMENT
(IHRM)
SECTION X: An Overview
PRESENTED BY:
JOANNA MARIE G. FONTIVEROS
Ph.D. in Education- Curriculum Development,
Candidate
 AN OVERVIEW TO IHRM
Three broad approaches to IHRM:
cross-cultural management: examining human behavior
within organizations from an international perspective
comparative industrial relations and HRM literature3 and
seeks to describe, compare and analyze HRM systems in
various countries
HRM in multinational firms
explore the implications that the process of
internationalization has for the activities and policies of
HRM
 CHAPTER I:
INTRODUCTION TO IHRM
DEFINING INTERNATIONAL HRM
DIFFERENCES BETWEEN DOMESTIC AND
INTERNATIONAL HRM
APPLYING A STRATEGIC VIEW OF HRM
THE CHANGING CONTEXT OF IHRM
CHAPTER II:
THE CULTURAL CONTEXT OF IHRM
DEFINING CULTURES
CULTURAL DIFFERENCES STUDIES
DEVELOPMENT OF CULTURES
 CHAPTER I:
INTRODUCTION TO
INTERNATIONAL HUMAN
RESOURCE MANAGEMENT
TO RECALL... Human resource planning

P. MORGAN'S
Staffing MODELselection,
(recruitment, OF IHRM
placement).

HRM refers to those

Performance management
activities undertaken by
an organization to Training and development

effectively utilize its Compensation and benefits

human resources.
Industrial relations

Industrial relations
Which activities change
when HRM goes
international?
DEFINING INTERNATIONAL HUMAN RESOURCE MANAGEMENT

P. MORGAN'S MODEL OF IHRM

broad human resource activities of

procurement, allocation, and utilization

The national or country categories involved in

international HRM activities

three categories of employees of

an international firm
NATIONAL OR COUNTRY CATEGORIES

HOST COUNTRY
where a subsidiary may be located;

PARENT-COUNTRY
where the firm is headquartered

‘OTHER’ COUNTRIES
may be the source of labor, finance, and
other inputs

The Coca-Cola Company

-headquartered in Atlanta, Georgia, USA
-218 office locations in over 200 countries
-19 manufacturing plants and approximately 50 sales offices
and distribution centers—employing more than 9,700 regular
employees.
Three categories of employees of an
international firm:

HOST-COUNTRY NATIONALS (HCNS)

employees who are citizens of the country
where the company's branch is located

PARENT-COUNTRY NATIONALS (PCNS)

employees who are citizens of and are hired from
the nation where an organization has its original
and current headquarters (the parent country)

THIRD-COUNTRY NATIONALS (TCNS)

employees who are citizens of and are
hired from the nation where an
organization has its original and current
headquarters (the parent country)
INPATRIATES
-The (US) Society for Human Resource Management defines an inpatriate
as a ‘foreign manager in the US’. Thus, an inpatriate is also defined as an
expatriate employees.
-some writers in international management define all HCN employees as
inpatriates
HCNs only become ‘inpatriates’ when they are transferred into the parent-
country operations as expatriates
 INTERNATIONAL HUMAN RESOURCE MANAGEMENT

"We define the field of IHRM broadly to cover all issues related to managing
the global workforce and its contribution to firm outcomes. Hence, our
definition of IHRM covers a wide range of human resource issues facing MNEs
in different parts of their organizations. "

Handbook of Research in International Human Resource Management

Stahl, Bjo ̈rkman and Morris
DIFFERENCES BETWEEN
DOMESTIC AND
INTERNATIONAL HRM
 INTERNATIONAL HUMAN RESOURCE MANAGEMENT

The complexity of operating in different countries and employing different

national categories of workers is a key variable that differentiates domestic
and international HRM, rather than any major differences between the HRM
activities performed.

International Human Resource Management

Dowling, Festing, Engle (2013)
 Six Factors Attributing To the
Complexity of IHRM
(Dowling, 1998)
More HR activities
The need for a broader
perspective

More involvement in employees’ personal

lives.

Changes in emphasis as the workforce

mix of expatriates and locals varies.

Risk exposure.

Broader external influences.

 MORE HR ACTIVITIES

To operate in an international environment, a human resources department

must engage in a number of activities that would not be necessary in a
domestic environment. Examples of required international activities are:
International Taxation
International relocation and orientation
Language translation services.
Administrative services for expatriates
Host-government relations
 MORE HR ACTIVITIES

International relocation and orientation involve the following activities:

Arranging for pre-departure training
Providing immigration and travel details
Providing housing, shopping, medical care, recreation, and schooling
information
finalizing compensation details such as the delivery of salary overseas,
determination of various overseas allowances, and taxation treatment.
 THE NEED FOR A BROADER PERSPECTIVE

Complex equity issues arise when employees of various nationalities work

together, and the resolution of these issues remains one of the major
challenges in the IHRM field.
 MORE INVOLVEMENT IN EMPLOYEES’ PERSONAL LIVES
housing arrangements, health care, and all aspects of the compensation package (cost-
of-living allowances, premiums, taxes, and so on)
MNEs have an ‘International HR Services’ section that provides services for PCNs and
TCNs, such as handling their banking, investments, home rental while on assignment,
coordinating home visits, and final repatriation.
providing suitable housing and schooling in the assignment location
assist children placed at boarding schools in the home country – a situation that is less
frequently encountered in the United States but relatively common in many other
countries, particularly former British colonies such as Sin- Singapore, Hong Kong,
Australia, and New Zealand, and in Europe.
recreational programs
 CHANGES IN EMPHASIS AS THE WORKFORCE MIX OF
EXPATRIATES AND LOCALS VARIES

As foreign operations mature, the emphasis put on various human resource

activities changes.

as the need for PCNs and TCNs declines and more trained locals become
available
resources previously allocated to areas such as expatriate taxation,
relocation, and orientation are transferred to activities such as local staff
selection, training and management development
 RISK EXPOSURE

expatriate's premature return to the parent country

expatriate's under-performance
HR needs to devise emergency and disaster risk plans (9-11 attack, SARS,
COVID19 )
 BROADER EXTERNAL INFLUENCES

-type of Government, labor relations, taxation, and health and safety

A host government can, for example, dictate hiring procedures, as has been
the case until recently in Malaysia. The Malaysian Government during the
1970s introduced a requirement that foreign firms comply with an extensive
set of affirmative action rules designed to provide additional employment
opportunities for the indigenous Malay ethnic group.
APPLYING A STRATEGIC
VIEW OF IHRM
FRAMEWORK OF
STRATEGIC HRM IN MNEs
 STRATEGIC HRM

assumes that MNEs operate in the context of worldwide conditions,

including the influences of industry (global or multi domestic) and
regional, national, and local markets that include geopolitical, legal,
socio-cultural, and economic characteristics.
Political, Economic, Sociological Technological, Legal, and
Environmental/ecological elements (PESTLE) acronym and analytical
tool, has often been used to describe the macro-environmental factors
that may influence MNEs.
 STRATEGIC HRM

De Cieri and Dowling suggest that exploration and adoption of the

PESTLE acronym in academic work would help to bring research and
practitioner approaches closer together.
They propose that external factors have a direct influence on both
internal/organizational factors and IHRM strategy and practices and that
external factors have a direct influence on MNE performance.
 STRATEGIC HRM:
EXTERNAL FACTORS

ORGANIZATIONAL LINKS WITH OTHER MNEs and NATIONAL

GOVERNMENT
ASYMMETRIC EVENTS
ENVIRONMENTAL DYNAMICS
 ASYMMETRIC EVENTS

threats that our political, strategic, and military cultures regard as

unusual.
Unmatched in our arsenal of capabilities and plans. Such events may or
may not appear truly dangerous, but they will certainly look different from
war as we have known it.
Highly leveraged against our particular assets – military and, probably
more often, civil.
Designed not only to secure leverage against our assets, but also
intended to work around, offset, and negate what in other contexts are
our strengths.
Difficult to respond to in a discriminate and proportionate manner.
(Gray, 2002)
 STRATEGIC HRM:
ORGANIZATIONAL FACTORS

MNE balance of global integration and local responsiveness

replication of HR practices across subsidiaries may be difficult due to the
influences of external factors in the local context (Morris et al, 2009)

(Gray, 2002)
 STRATEGIC HRM:
ORGANIZATIONAL FACTORS
Firm size and maturity
staffing decisions and demand for HR practices such as training will
be influenced by the skill and experience mix within the firm and/or
subsidiary
Corporate governance
corporate governance and incorporation of ethical principles and
values into international business practice
HR managers may be required to play important roles in corporate
governance, such as the design, implementation and maintenance of
corporate codes of conduct.
 THE CHANGING CONTEXT
OF IHRM
Internationalizing firms rely on having the right
people to manage and operate their businesses and
good IHRM practices that are appropriate to the
context in which they occur.
Desatnick and Bennett (1978) concluded:

The primary causes of failure in multinational

ventures stem from a lack of understanding of
the essen- tial differences in managing human
resources, at all levels, in foreign environments.

‘human’ considerations are as important as the

financial and marketing criteria
 CHAPTER II:
THE CULTURAL CONTEXT OF
IHRM
WESTERN CULTURE VS. ASIAN CULTURE
WESTERN CULTURE VS. ASIAN CULTURE
WESTERN CULTURE VS. ASIAN CULTURE
VIDEO ON CULTURE
WE WILL TALK ABOUT...

Definitions of culture
Cultural concepts
Results of various intercultural management studies
Hofstede, GLOBE, Trompenaars, & others
Reflections on cross-cultural management research
Development of cultures
WE WILL TALK ABOUT...

Definitions of culture
Cultural concepts
Results of various intercultural management studies
Hofstede, GLOBE, Trompenaars, & others
Reflections on cross-cultural management research
Development of cultures
 DEFINITION OF CULTURE
Culture consists of patterned ways of thinking, feeling, and reacting
acquired & transmitted mainly by symbols,
constituting the distinctive achievements of human groups,
including their embodiments in artefacts;
The essential core of culture consists of traditional ideas & their
attached values

Kluckhohn & Kroeber

HANSEN’S FOUR ELEMENTS OF CULTURE:

Communication
Thought
Feeling
Behavior
 SCHEIN’S CONCEPT OF CULTURE

A culture has 3 levels:

Artefacts - visible
Values– intermediate level of consciousness
Underlying assumptions – invisible, unconscious
SCHEIN’S SIX UNDERLYING ASSUMPTIONS

Nature of reality & truth

Time dimension
Effect of spatial proximity & distance
Nature of being human
Type of human activity
Nature of human relationships
INTRO TO CROSS-CULTURAL MANAGEMENT
RESEARCH
Goals:
to describe and compare organizational behavior between
countries & cultures
Explain & improve the interaction between employees, customers,
suppliers or businesses in different countries & cultures
 THE HOFSTEDE STUDY
Hofstede’s 5 culture dimensions

1.Power distance
2.Uncertainty avoidance
3.Femininity vs. masculinity
4.Individualism vs. collectivism
5.Confucianism or long-term orientation
LONG-TERM CULTURES CHARACTERIZED BY:
Great endurance, persistence in pursuing goals
Position of ranking based on status
Adaptation of traditions to modern conditions
Respect of social & status obligations within limits
High savings rates & high investment activity
Readiness to subordinate oneself to a purpose
The feeling of shame
SHORT-TERM CULTURES CHARACTERIZED BY:
Personal candor & stability
Avoiding loss of face
Respect of social & status obligations without consideration of
costs
Low savings rates & low investment activity
Expectations of quick profit
Respect for traditions
Greetings, presents & courtesies based on reciprocity
HOFSTEDE STUDY: POWER DISTANCE & INDIVIDUALISM VS.
COLLECTIVISM
EXAMPLES OF THE IMPACT OF THE CULTURAL
CONTEXT ON HRM PRACTICES
 RECRUITMENT AND SELECTION
In societies low on ‘in-group collectivism’ individual achievements
represent important selection criteria.
In societies high on ‘in-group collectivism’ the emphasis in the
recruiting process is more on team-related skills than on individual
competencies.
 TRAINING AND DEVELOPMENT
In societies high on gender egalitarianism women have the same
chances for vertical career advancement as men.

In societies low on gender egalitarianism female managers are rare.

 COMPENSATION
In societies high on uncertainty avoidance employees tend to be
rather risk-averse and prefer fixed compensation packages or
seniority-based pay.
In societies with low uncertainty avoidance employees tend to be
rather risk-taking and accept high income variability through
performance-based pay.
 TASK DISTRIBUTION
Societies high on collectivism tend to emphasize group work.
Societies high on individualism rather attribute individual
responsibilities in the work system.
FUTURE HOFSTEDE-STYLE RESEARCH ISSUES
Realization of cross-level studies
Consider groups, organizations, & country levels
Inclusion of cross-cultural differences
Consider intracultural variance
Inclusion of theoretically relevant moderators
Consider sex, class affiliation, etc.
Interaction between variables
 THE GLOBE STUDY
Are there leadership behaviors, attributes and organizational practices that are generally
accepted and effective across cultures?

Are there leadership behaviors, attributes and organizational practices that are accepted and
effective in some cultures only?

How much do leadership attributes that are traced back to social and organizational contexts
affect the effectiveness of specific leadership behavior and its acceptance by subordinates?

How much do behaviors and attributes in specific cultures influence the economic, physical
and psychological wellbeing of the members of societies researched in the study?

What is the relationship between these socio-cultural variables and an international

competitive capacity of the various sample societies?
 THE GLOBE STUDY
GLOBE’s 8 culture dimensions
Institutional collectivism
In-group collectivism
Uncertainty avoidance
Power distance
Gender egalitarianism
Assertiveness
Performance orientation
Humane orientation
 THE GLOBE STUDY
Institutional Collectivism
describes the degree to which organizational and societal
institutional practices encourage and reward collective
distribution of resources and collective action’.

In-Group Collectivism
The degree to which individuals express pride, loyalty, and
cohesiveness in their organizations or families.
 THE GLOBE STUDY
Uncertainty Avoidance
includes ‘the extent to which a society, organization, or group
relies on social norms, rules, and procedures to alleviate
unpredictability of future events’.

Power Distance
‘the degree to which members of a collective expect power to
be distributed equally
 THE GLOBE STUDY
Gender Egalitarianism
‘the degree to which a collective minimizes gender inequality’.

Assertiveness
The degree to which individuals are assertive, confrontational,
and aggressive in their relationship with others’.
 THE GLOBE STUDY
Performance Orientation
‘the degree to which a collective encourages and rewards
group members for performance improvement and excellence’.

Humane Orientation
‘the degree to which a collective encourages and rewards
individuals for being fair, altruistic, generous, caring, and kind
to others’
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Performance Orientation
‘the degree to which a collective encourages and rewards
group members for performance improvement and excellence’.

Humane Orientation
‘the degree to which a collective encourages and rewards
individuals for being fair, altruistic, generous, caring, and kind
to others’
THE TROMPENAARS & HAMPDEN-TURNER STUDY

1.UNIVERSALISM VS. PARTICULARISM

RELATIONSHIPS
2.INDIVIDUALISM VS. COMMUNITARIANISM
BETWEEN
3.EMOTIONAL VS. NEUTRAL
PEOPLE
4.SPECIFIC VS. DIFFUSE
5.ASCRIPTION VS. ACHIEVEMENT

CONCEPT OF TIME 6. SEQUENTIAL VS. SYNCHRONIC CONCEPT OF TIME

CONCEPT OF NATURE 7.INTERNAL VS. EXTERNAL CONTROL

THE TROMPENAARS & HAMPDEN-TURNER STUDY
Universalism vs. Particularism:
Universalist thought is characterized according to the authors
by the following logic: ‘What is good and right can be defined
and always applies’.
Particularist cultures, on the contrary, pay more attention to
individual cases, deciding what is good and correct depending
on relationship and special friendship arrangements.
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Individualism vs. Communitarianism
The underlying question here is: ‘Do people regard themselves
primarily as individuals or primarily as parts of a group?'
The other question is whether it is desirable that individuals
primarily serve group aims or individual aims.
Individualist cultures, similar to Hofstede’s explanation,
emphasize the individual, who predominantly takes care of
himself.
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Emotional vs. Neutral:
This dimension describes how emotions are treated and
whether they are expressed or not.
Neutral cultures tend to express little emotion; business is
transacted as objectively and functionally as possible.
In affective cultures, an emotional cultural basis is accepted as
a part of business life and emotions are freely expressed across
many social contexts.
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Specific vs. diffuse:
In diffuse cultures a person is involved in the business
relationship, whereas specific cultures focus more on
contractually regulated aspects.
Specific cultures demand precision, an objective analysis of
circumstances, and presentation of results, whereas diffuse
cultures take other context variables into consideration.
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Ascription vs. Achievement:
In cultures focused on status achievement, people are judged
based on what they have achieved, in other words the goals
they have fulfilled recently.
In ascriptive cultures, status is ascribed from birth by
characteristics such as origin, seniority, and gender
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Sequential vs. Synchronic concept of time:
Cultures are differentiated by the concept of time where they
may be more past, future or present oriented.
The different concept of time is also demonstrated by the
organization of work processes.
Sequential behavior is behavior that occurs successively and
synchronous behavior is the possibility to ‘multitask’ and do a
number of things at the same time
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Internal vs. external control:
This dimension describes the concept of nature and refers to
the extent to which societies try to control nature.
Sony executive Morita
from the love of classical music and the desire not to
burden the world with his own music taste
Western societies, the mindset is different; music is heard
in the headphones not to be bothered by the environment
wearing a facemask during the cold/flu season
external control cultures masks are used because one does
THE TROMPENAARS & HAMPDEN-TURNER STUDY
Internal vs. external control:

wearing a facemask during the cold/flu season

external control cultures masks are used because one does

not want to infect others
whereas in internal control cultures masks are used to
protect one’s self from outside sources of infection
 HALL & HALL’S CULTURAL DIMENSIONS

1.High vs. low context communication

2.Spatial orientation
3.Monochrome vs. polychrome time
4.Information speed
 HALL & HALL’S CULTURAL DIMENSIONS
High vs. Low Context Communication:
In High Context cultures, a more indirect form of expression is
common, where the receiver must decipher the content of the
message from its context
In so-called Low Context cultures, the players tend to communicate
more to the point and verbalize all-important information.
 HALL & HALL’S CULTURAL DIMENSIONS
Spatial orientation:
The focus of this dimension is on the distance between people
of various cultures when communicating.

Distance that is adequate for members of one culture, may feel

intrusive for members of another culture.
 HALL & HALL’S CULTURAL DIMENSIONS
Monochrome vs. polychrome concept of time:
A monochrome concept of time is dominated by processes,
where one thing is done after the other

whereas in the polychrome concept, these actions occur at the

same time.
 HALL & HALL’S CULTURAL DIMENSIONS
Information speed:
This dimension focuses on whether information flow in groups
is high or low during communication.
In the USA people tend to exchange personal information
relatively quickly
while in Europe such a rate of information exchange would
require a more extended acquaintance.
THE DEVELOPMENT OF CULTURES
 CULTURES CHANGE DUE TO:

International connectedness
Global economy coordination
Harmonization of laws & regulations
Migration
CULTURES ARE NOT CONFINED TO GIVEN
TERRITORIES.
THIS MEANS NEW CHALLENGES FOR HRM.
 SUMMARY
adequate understanding of the cultural context, as it impacts the
behavior of an organization’s employees, is of decisive importance
cross-cultural comparative research may provide valuable hints to
managers about how to cope with employees of foreign cultures.
They can form the basis for the development of intercultural training
measures
The studies could assist in a structured analysis about the
transferability of specific elements of the parent firm’s existing HR
policy to foreign subsidiaries
 EDM 603

Thank You
For Your Attention

International Human Resource Management, 6th Edition

Peter J. Dowling, Marion Festing and Allen D. Engle, Sr.
2013