Unit 1 - Lecture 1

Introduction to International Human Resource

Approaches to International Human Resource Management

Compilation G Mitchell -Revised 2022/23

Ground Rules
• On time
• Respect – due to everyone
• Cell phones OFF
• Participation
•PPPPPP
 Lecture Content
1. Key IHRM terms
2. Factors that influence the management of a
global workforce
3. Differences between domestic and
international HRM
4. Potential challenges of current IHRM and the
impact of intergovernmental and employer
organizations
 Definitions and Terms
Host Country Na7onal
Human Resource
Management Parent Country Na7onal
Interna7onal Human Third Country Na7onal
Resource Management
Subsidiary
Multi-national Enterprise Variables
Inpatriate
Moderate
Multi-national Corporation Expatriate
Culture shock Repatriation
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IHRM Chapter 1
When an organization goes International the basics
obtain, plus:

1. Basic – procure, allocate and utilize

2. Now involves:
Host country ( where subsidiary is)
Home country (headquarters)
Other country (support such as finance)
3. Categories of employees:
Host-country national (HCN)
Parent-country national (PCN)
Third-country national (TCN)
Example
What is International HRM?
Is it any different from HRM. Yes and No.
HR Activities include:
• Human Resource Planning
• Staffing
• Performance management
• Training and development
• Compensation and benefits
• Labor relations
The above activities will have a change whenever a firm goes
international.
Defini;on 1 of IHRM
Boxall, P. (1992) defined
International Human Resource Management (IHRM) as 'concerned with the
human resource problems of multinational firms in foreign
subsidiaries (such as expatriate management) or more broadly,
with the unfolding HRM issues that are associated with the various
stages of the internationalisation process. (Boxhall, P. 1992).
 Figure MORGAN: Inter-rela1onships between approaches to
1-2 the field

IHRM Chapter 1
 IHRM – Defini;on 2
Definition: based on the Dimensions
• International HRM (IHRM) is the process of
procuring, allocating, and effectively utilizing
human resources in a multinational corporation,
while balancing the integration and differentiation
of HR activities in foreign locations.
• Different experts in the field defined it differently.
It is a task that facilitates the most effective use of
people to achieve organizational and individual
goals. HRM seeks to bring together and develop an
effective organization enabling the employees to
do their best both as an individual and as a
member of a working group.
Dimensions continued
• Three naDonal or country categories involved in
internaDonal HRM acDviDes are:
• the host country where a subsidiary may be
located,
• the home country where the firm is
headquartered, and,
• the ‘other’ countries that may be source of labor
or finance.
• The three types of employees of an
internaDonal firm:
• the host country na:onals (HCNs),
• the parent-country na:onals (PCNs), and
• the third country na:onals ( TCNs).
EXAMPLE: Process of procuring,
allocating, and effectively utilizing
human resources in a multinational
corporation.
IBM is based in the this makes it the PC

• IBM employs Jamaican citizens (HCNs) in its

operations,

IBM often sends US citizens(PCNs) to Asia-Pacific

countries on assignment, and may send some of
its
employees on an assignment to its
Jamaica Operations (as TCNs).
 Three Approaches to IHRM
• Cross-cultural Management
• Examine human behavior within organizaKons from an internaKonal
perspecKve
• Compara7ve HRM and Industrial Rela7ons
• Seeks to describe, compare and analyze HRM systems and IR in different
countries
• HRM in mul7na7onal firms
• Explore how HRM is pracKced in mulKnaKonals
[Mark Mendenhall (2000), theoretical influence ]

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 Figure MORGAN: Inter-rela1onships between approaches to
1-2 the field

14

IHRM Chapter 1
 Interna;onal HRM vis-à-vis
Domes;c HRM: Core Concepts
Interna7onal HRM vis-à-vis Domes7c HRM: Core
Concepts
• What activities in the ‘International Human Resource Management’
are over and above the domestic HRM? How is it different from the
within-the-nation practice of HRM?
• Familiarize you with the extra HR activities that are incremental to
domestic HRM.
3. Why broader perspective is necessary for International HRM?
4. How employees personal or family lives are a focus in Internal HRM
unlike domestic HRM? 5. What are different ways of workforce mix of
expatriates and locals?
6. Does risk involved in International business affect HRM?
7. What are the external influences that impact on International
HRM?
Differences between Domes;c HRM and
IHRM 1/2
§ More HR activities: taxation, culture orientation, administrative
services
§ The need for a broader perspective: cater to multiple needs
§ More involvement in employees’ personal lives: adjustment,
spouses, children
§ Changes in emphasis as the workforce mix of expatriates and locals
varies: fairness
§ Risk exposure: expatriate failure, terrorism
§ Broader external influences: government regulations, ways of
conduct
 Differences between Domestic HRM and
IHRM – 2/2
• Complexity involved in operaFng in different countries, varied naFonaliFes of employees
• The different Cultural Environment
• The industry or industries with which the MNC is involved
• AKtudes of Senior Management
• Extent of reliance of MNC on home country domesFc market
 Some differences between IHRM and HRM
• Tax Laws - Expatriates, the naYonals working in different country
other than their naYve land are subject to laws of the both the
naYons, both home and host countries.
• Reloca7on and orienta7on - involves acYviYes like imparYng of pre-
departure training; providing of immigraYon and travel details;
providing housing, shopping, medical care, recreaYon, and schooling
informaYon; and finalizing compensaYon details such as delivery of
salary abroad, determinaYon of various internaYonal allowances, and
taxaYon treatment.
• Repatria7on
 More differences between IHRM and
HRM
• Provision of Administrative Services - A multinational firm also has to
provide administrative services for expatriates in the host country in
which it operates.
The policies and procedures with regard to these services are not
always clear cut and may conflict with local countries. An ethical and
legal practice in one country is an unethical and unacceptable
practice in another.
More differences between IHRM and HRM
• Host –Government Relations
HR department should take care of relationship with host government
employees since particularly in developing nations work permits and
other certificates are more easily obtained when a personal
relationship exists between relevant government employees and
multinational managers.
• Provision of Language Translation Services
Provision of language translation services for internal and external
correspondence is an additional international HR activity. It is, if
necessary, expanded to provide translation service to all foreign
operation departments within the multinational.
Even more differences between IHRM and
HRM
• More Involvement in Employees’ Personal Lives
The HR professional or HR department has to see that the expatriate
employee understands housing arrangements, health care and all
aspects of the compensaYon package provided for
the assignment ( like cost-of- living allowances, premiums, taxes etc.)
Many mulYnaYonal have an ‘ InternaYonal HR Services’ secYon that
coordinates administraYon of the above programs and provides
services for PCNs and TCNs such as handling their banking,
investments, home rental while on assignment, coordinaYng home
visits, and final repatriaYon.
Even more differences between IHRM and
HRM
• Risk Exposure
An employee sent on foreign assignment may fail and come back to home country.
Costs of such failure are three Kmes higher than those in domesKc service. Such
failure also causes indirect costs like loss of market share and damage to customer
relaKonships. Terrorist problems should also be properly assessed and safety
should be planned by HR funcKon. Emergency evacuaKon plans should be devised
by HR.
• More External Influences
Major external factors like type of government, state of the economy and accepted
pracKces of doing business in host country influence the internaKonal HRM of
mulKnaKonal firms. For example, a host country can dictate hiring terms. In
Malaysia, the local Malays should be adequately employed and periodical returns
should be sent on employment paZerns of different ethnic groups.
Summary: Differences between IHRM and
HRM
• International HR concerns itself with more activities.
• Since the international HR cuts across more than one nation, a
broader perspective instead of single- country specific mindset is
necessary.
• It touches upon personal and family lives of the employees
• Unforeseen events like wars, pandemic, economic differences etc;
should be properly thought through.
• External uncontrollable factors like changes in host country economy
influence the international HR.
What causes the Differences ? -
Modera7on
Moderating Variables: HRM VS IHRM
• Complexity involved in operating in different countries and employing
different national categories of employees is a key variable that
differentiates domestic and international HRM
• Four other factors that accentuate or diminish the differences
between domestic and international HRM.
• Cultural Environment
• The industry with which the multinational is primarily involved
• The extent of reliance of the multinational on its home country domestic
market
• The Attitude of Senior Management
 Focused Reading and
Notetaking
• Please become familiar with the key terms
• Theorist and their theory
• Understanding of the differences between Domestic
HRM and International HRM
• What causes the differences
• Look at IHRM to gain an understanding about the
complexity of it and the challenges that present
themselves.
END
SUMMARY: Interna;onal HRM Differences
• Greater Number of Services /more HR activities
• Special Services to Unique Group : and more involvement in employees
lives
• Compensation Complexity
• Foreign Exchange Rate Attention
• Language and Cultural Differences
• Changes in emphasis as the workforce mix of expatriates and locals varies
• Risk exposure
• Broader external influences
Increasing Importance of Global Human Resources
Understanding
Interna.onal
Mergers and
Acquisi.ons

Importance of Global
Foreign Human Global
Human Resources
Resources Management Competition

Market Access
Opportunities