2.

Global HRM Functions

• International Recruitment and Selection : It is
simply the process involved in the searching and hiring of
talented candidates from anywhere across the globe.
• The variation in market, culture, languages, policies, etc
have given global recruiting of talents a new perspective.
• For instance, the rules and regulations binding employees’
hiring in Europe will have a different taste to the system
used in America. For instance, the resume/CV format
for job hiring in America doesn’t need information like date
of birth, marital status, etc compared to how this
information is required in some countries. Also, in America,
most job CV/resume must be skill and result-driven
compared to the duty-based resumes/CV required in some
regions of the world.
Sources of International Labour Market : MNCs makes use of local talent in each respective local
market but also deploy talent on Global basis.
Three sources : Home / Parent Country Nationals
Host Country Nationals
Third Country Nationals
Global Staffing : An organisation can choose to hire according to any of the staffing policies mentioned below
:
1) Ethnocentric : key mngt positions are filled by parent company officials.
2) Polycentric : Host country nationals manage subsidiaries whereas headquarter positions are held by parent
company nationals.
3) Geocentric : best & most competent individuals hold key positions irrespective of the nationalities.

Selection Criteria : Two way process, A prospective candidate may reject expatriate assignment for
individual reasons, family reasons , also challenging for those who selects staff for international assignments to
determine appropriate selection criteria.

Factors : 1) Technical ability : Technical and managerial skills are checked with the candidate’s past and
present supervisors during expatriate selection process.
2) Cross Cultural Suitability : Soft skills imp factor for international managers for successful performance. It
includes psychological, personal features , international experience and lanugage knowledge.
3) Family requirements : very imp. influence factor on the success of an international assignment. Upon arrival
responsibility for settling the family into its new home falls spouse. Also disruption to children’s education is an
imp. Consideration.
4) Cultural requirement : Different country , different legislation , difficult to facilitate employment related
immigration , difficult to make international transfer.
5) Language : Knowledge of host country’s language is an imp. aspect of expatriate performance regardless of
the level of position.
6) Multi National Enterprise Requirements : selection of expatriates depends on specific situation of the MNE.
Depending on operations in particular country, company may require more use of PCNs and TCNs.
International compensation : can be defined as the provision of monetary and non-monetary
rewards, including base salary, benefits, perquisites, long- and short-term incentives, valued by
employees in accordance with their relative contributions to MNC performance
Objectives (From company point of view) : Policy should be consistent with the overall strategy,
structure and business needs of the MNC.
▪ Policy must work to attract and retain staff in the areas where MNC has the greatest need &
opportunities.
▪ Policy should facilitate the trf. Of international employees in the most cost-effective manner for the
firm.
▪ Policy must give due consideration to equity and ease of consideration.
Objectives (From international employee point of view) :
▪ Policy should offer financial protection in terms of benefits, social security and living costs in foreign
location.
▪ Their Expectation that foreign assignment will offer for financial advancement through income and
savings.
▪ Expectations of their issues such as housing, child’s education and recreation will be addressed.
 Components of International Compensation Program - Designing and developing a
better compensation package for HR professionals for international assignments
requires knowledge of taxation, employment laws, and foreign currency fluctuation by
HR professionals.
It is easy to develop the compensation package for the parent country national but
difficult to manage the host and third-country nationals.
✔ Base Salary : It is usually the main
component in international compensation,
and is the main benchmark used for other
elements in an expatriate compensation
package, such as bonuses and benefits.
✔ Foreign Service inducement/hardship
premium : 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.
✔ Allowances:
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.
(d) 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.
Relocation Allowances and Moving:
Relocation allowances usually cover moving, shipping; temporary living expenses, and down
payments or lease-related charges.
(e) 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.
 Three Approaches to International Compensation
• Going Rate Approach : Also known as “ Market Rate Approach”, is based
on local market rates. If the salary structure in the host country is less
than home county then additional salary payments are made to
expatriates.
• Balance sheet Approach : known as “Build up Approach”. Widely used
by the organization. The main idea is to maintain the expatriate’s
standard of living through out the assignment at the same level as it was
in his / her country.
• Local plus Approach : Companies pay their foreign employees according
to local salary structure.
 HRM Perspectives in Training and Developments
• Expatriates Training :
Recruitment of expats is a
meticulous, drawn-out process that
involves providing prospective
expats with intercultural training so
that they’re ready to integrate into
the new environment.. Many
challenges come with living and
working in another country.
However, many of these challenges
can be mitigated by taking your
employees and their families
through a formal expatriate
training program before they
relocate to the new country.
The primary goals of this training is
to acclimatize the expat to the new
living and working environment and
assist him/her in quickly adjusting a
culture that he / she is not familiar
with.
Advantages of Expatriate Training : Clear understanding of role : Training helps employees to
meet expectations of the assignment with greater ease.
2) Better integration : Helps expat to understand in detail the cultural differences between home and
host countries. Training develops the emotional flexibility to accept unfamiliar behaviour and values
are effective ways of doing things.
3) Improved language skills : Training offers basics of host country ‘s language to expat. Helps to
access information and build connections.
4) Develop cultural awareness : Pre-departure training activities are mainly concerned with
developing cultural differences.
5) Rapid adjustment : Helps expat to adjust more rapidly to the new culture. Also helps to cope with
unexpected events in a new culture.
6) Adjustment of family : Expatriate training programs expedite the transition process by cultivating
your employees’ cultural sensitivity and equipping them and their families with the tools, skills
and knowledge required to effectively interact with people from other cultures.
7) Avoids unnecessary Repatriation cost : training provided to expat helps him and his family to
adjust themselves with new culture easily. This avoids premature repatriation cost to the
business.
• Cross cultural training is
a formal efforts to
prepare people for more
effective interpersonal
relations and for job
success when they
interact extensively with
individuals from cultures
other than their own.
• It facilitates more
effective cross cultural
interactions.
International Performance management is a very important process of
human resource management (HRM), in general. It implies an assessment of
current or previous results or performance of the employee, team or the
whole organization. It is a base for many business practices related to HRM.
• It provides feedback to employees at all levels so they will know where
they stand.
• Develops valid bases for employment decisions involving pay ,
promotions, job assignments, retention and termination decisions; and
• Providing a means to warn employees about unsatisfactory
performance.
 Factors influencing performance of employees at workplace (April 2019)
• Managerial Expectations should be in line
with duties assigned to employee, should not
be high else will lower the performance of
employee.
• Motivation : provision monetary and non
monetary incentives.
• Commitment from company for eg.
Competitive package, payment of
allowances, regular provision of training to
keep employee updated in return
commitment from employees.
• Employee Evaluation : interactive process.
Manager gives input on employee’s
performance .What employee has learned
through out the year is pointed out.
• Job security :
 • Skills & Knowledge imp for his performance.
• Role clarity : clear understanding of job responsibilities in regular helps to improve
performance whereas ambiguity of role lead to poor performance.
• Work environment and culture : Healthy environment boosts morale, increases
productivity.
Criteria used for Performance Appraisal of International Employees :
1) Hard goals are objective , quantifiable measured on ROI, Market share etc.
2) Soft goals are trait based hence on interpersonal skills.
3) Contextual goals are measured on the basis of result from the situation in which
performance occurs.
Appraisal is done by immediate superiors.
Motivation and Reward Systems : Companies use both positive reinforcement and negative
reinforcement to motivate employees. Motivation techniques encourages employees to
produce more and better quality work.
Reward : is an outcome of performance. It is material and psychological returns for
performing activities in any organization. Rewards are given on the basis of performance.
Essential conditions to fulfill reward system
• Safety Needs : Financial Reward fulfills material needs and non financial rewards
fulfills social & psychological needs of the employees.
• Effort- Reward Relation : there must be direct link between effort and reward.
Employee should be paid in direct proportion to his performance.
• Equitable reward : distribution of reward should be equitable.
• Cost effective : reward system should be determined on the basis of employee
performance and organizational benefits.
• Variety of rewards and methods : The variety of reward methods should be
developed as people will have different needs and they choose different path to
satisfy their needs.
• Performance based : better performance better reward, increases motivation.
• Transparent & Predictive : employees must be familiar with reward system , able
to calculate, predict .
• Competitive : reward system must be revised from time to time otherwise
employee may leave the job.
 • Bench marking Global Practices : It is systematic process used for identifying and
implementing best or better practices. The fast and easy way to improve is to compare and learn
from successful organizations. It is essential as employees in IHRM are from varies cultures and
nationalities.
• Industrial Relations : known as Labour Relations , occupies an important place in IHRM. It is
system by which workplace activities are regulated. Arrangement by owners, managers and the
staff of organizations come together to engage in productive activity.
• The Key Players in IR are :
a) Employees : They are represented by Trade Union. Union seek to protect the interests of
workers at work place.
b) Employers : MNCs and their associations. To set the standards of employee management ,
attitudes behaviour and performance.
To set terms and conditions of employment.
To act in a fair and reasonable way towards all.
c) Government : Acts as an employer and regulator. It enacts legislations , set up tribunals and
enforces them for the sake of improving labour welfare.
Key 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:
• In case there is a high level of inter-subsidiary
production integration,the labour relations function is
centralised 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: What should be 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.
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.
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.