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International Business
Rakesh Mohan Joshi Professor & Chairperson, IIFT New Delhi

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Chapter 17

INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Copyright @ Oxford University Press International Business R. M. Joshi Chapter 17: International Human Resource Management

Learning Objectives

To explain the concept of international human

resource management

To elucidate various types of international organizational structures

To discuss strategic orientations and practices
for international human resource management To elaborate upon the management of various human resource activities

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

 has augmented the complexity of staffing. Copyright @ Oxford University Press International Business R.  Human resource practices followed in the West may not be very relevant in other countries due to differences in sociocultural and regulatory environments.Globalization and HRM The rapid globalization of business has resulted in new challenges for cross-country management of human resources which include  HRM has become a crucial determinant to a firm’s success Growing significance of trans-national experience for top ‘Off-shoring’ of business operations to low-cost locations or failure in international business. and differential compensations. performance monitoring.  management jobs in global corporations. Joshi Chapter 17: International Human Resource Management . M.

training and development.Human Resource Management (HRM) All those activities undertaken by an organization to utilize its human resources effectively. Copyright @ Oxford University Press International Business R. such as labour relations. expatriate management. M. performance management. fulfillment of regulatory obligations. human welfare and safety etc.. such as staffing. Joshi Chapter 17: International Human Resource Management . It includes activities. compensation. and industrial relations.

Joshi Chapter 17: International Human Resource Management . Copyright @ Oxford University Press International Business R.International HRM Comprising diverse requirements of various subsidiaries and developing and sustaining human resource capabilities to achieve organizational goals. M.

. M. and countries of operations. 728 Copyright @ Oxford University Press International Business R. Take Fig.e. types of employees.A Model of International HRM Its an interplay among three dimensions. Joshi Chapter 17: International Human Resource Management . 17.1 from page no. human resource activities. i.

M. International HRM Increased functional activities Functional heterogeneity Increased involvement in employees’ personal lives     Enhanced risks  Increased influence of external environment Chapter 17: International Human Resource Management Copyright @ Oxford University Press International Business R. Joshi .Domestic vs.

International Organizational Structures     Export Department International Division Structure Global Organizational Structure Global Functional Division Structures   Global Product Structure Global Geographic Structure   Global Matrix Structure Trans-national Network Structure Chapter 17: International Human Resource Management Copyright @ Oxford University Press International Business R. Joshi . M.

M. Joshi Chapter 17: International Human Resource Management .Strategic IHRM Orientations and Practices Copyright @ Oxford University Press International Business R.

Copyright @ Oxford University Press International Business R. Key managerial Locals are and technical personnel are recruited from the parent country nationals (PCNs). M.Ethnocentric IHRM Orientation The company tends to follow the parent company’s home country HRM practices for its employees across the world. Joshi Chapter 17: International Human Resource Management employed only for supporting or lower level jobs . with limited opportunities to grow.

Host country nationals (HCNs) are often employed in foreign subsidiaries whereas the headquarters are generally managed by the PCNs.Polycentric IHRM Orientation Different HR strategies are adopted for different countries depending upon the need. Besides. Host country nationals have higher opportunities for career advancement. Copyright @ Oxford University Press International Business R. Joshi Chapter 17: International Human Resource Management . M. performance evaluation measures and compensation also vary considerably from subsidiary to subsidiary.

Regiocentric IHRM Orientation Most HR strategies are adopted regionally. Joshi Chapter 17: International Human Resource Management . employees are transferred within a region rather than across the region. M. Depending upon the nature of business and marketing strategy. Copyright @ Oxford University Press International Business R.

The best talented personnel are posted throughout the MNE irrespective of their nationalities. Joshi Chapter 17: International Human Resource Management . M. Copyright @ Oxford University Press International Business R.Geocentric IHRM Orientation The HR policies and practices of the firm are globally integrated leading to development of a real global corporation.

Joshi Chapter 17: International Human Resource Management . M.Managing International Human Resource Activities Copyright @ Oxford University Press International Business R.

and placement of human resources Copyright @ Oxford University Press International Business R. The process involves identifying the human resource requirement of an organization. Joshi Chapter 17: International Human Resource Management . selection.Staffing The process of determining the organization’s current and future human resource requirements to meet the organizational goals and taking appropriate steps so as to fulfill those requirements. and recruitment. M.

M. availability of scientists and engineers. MNEs often hire locals for lower level jobs except for some Middle East countries which import people even for labour and other low-paid jobs. for most skilled and professional assignments. However. quality of educational system. and quality of management schools plays an important role in a firm’s decisions to hire locals or expatriates Copyright @ Oxford University Press International Business R.Manpower Availability Availability of desired manpower affects a firm’s decision to hire locals or expatriates. Joshi Chapter 17: International Human Resource Management .

Forms of International Assignments    Filling up job positions Management development Organizational development Copyright @ Oxford University Press International Business R. Joshi Chapter 17: International Human Resource Management . M.

Assignments.Types of International Assignments  Short-term (upto three months): Assignments related to small project work. such as production or marketing manager or a managing director of a subsidiary Copyright @ Oxford University Press International Business R. or an interim arrangement till a suitable permanent arrangement is made  Extended (Upto one year): Involving similar activities as for short-term assignments for a relatively longer duration  Long-term (one to five years): Also referred to as ‘traditional expatriate assignment’. Joshi Chapter 17: International Human Resource Management . M. machinery or plant repairing. involve a well-defined role in foreign operations.

Non-standard Assignments  Commuter assignments Rotational assignments Contractual assignments    Virtual assignments Chapter 17: International Human Resource Management Copyright @ Oxford University Press International Business R. Joshi . M.

A large number of MNEs engage host country citizens for middle and lower level jobs. Joshi Chapter 17: International Human Resource Management .Sources of Human Resources for International Staffing  Local citizens or HCNs Local employees hired by an MNE of the host country are known as Host Country Nationals (HCNs). M. Copyright @ Oxford University Press International Business R.

socialization. Copyright @ Oxford University Press International Business R. and gathering market business intelligence. Expatriates are often used as agents of direct control. Joshi Chapter 17: International Human Resource Management . M. network trade.•Expatriates Employees who temporarily reside and work outside their home country are commonly known as ‘expatriates’ or ‘expats’.

Historically MNEs filled up key positions in their foreign affiliates with PCNs. Parent country nationals (PCNs) Employees country who where are citizens the of the is MNE headquartered. M. Copyright @ Oxford University Press International Business R. Joshi Chapter 17: International Human Resource Management .

Joshi Chapter 17: International Human Resource Management . Third country nationals (TCNs) Employees. Copyright @ Oxford University Press International Business R. who are citizens of countries other than the country in which they are assigned to work or the country where the MNE is headquartered. M.

M. The breakthroughs in ICT have made it possible to off-shore various service activities too. Joshi Chapter 17: International Human Resource Management .Off-shoring Transferring jobs to foreign countries which were previously carried out domestically. Copyright @ Oxford University Press International Business R.

Recruitment and Selection Recruitment: The process by which an organization attracts the most competent people to apply for its job openings. M. Joshi Chapter 17: International Human Resource Management . The process of recruitment and selection varies widely among countries Copyright @ Oxford University Press International Business R. Selection: The process by which organizations fill their vacant positions.

Joshi . M.Characteristics of Global Managers  Global mindset  Strategic perspective vision and long-term   Ability to work in diverse culture Willingness to relocate for international assignments Ability to manage change and transition Chapter 17: International Human Resource Management  Copyright @ Oxford University Press International Business R.

Joshi . M.Selection Criteria for International Assignments   Technical and managerial competence environments Ability to perform under cross-cultural  Family attitude towards international assignments   Regulatory framework in host countries Language Chapter 17: International Human Resource Management Copyright @ Oxford University Press International Business R.

also known as expatriates. Beside identifying and recruiting the right personnel with desired skills for international assignments. form an integral part of a firm’s international staffing strategy. it is also extremely important to provide them with a conducive environment to get their optimum output Copyright @ Oxford University Press International Business R.Managing Expatriates People working out of their home countries. especially for higher management positions. M. Joshi Chapter 17: International Human Resource Management .

M. Joshi . children’s education. and safety concerns Health and medical concerns Adaptation problems to different management styles Chapter 17: International Human Resource Management Copyright @ Oxford University Press International Business R. such as uncomfortable living conditions Family problems.Reasons for Expatriate Failure         Inability to adjust in alien cultures Career apprehensions on repatriation Relocation anxieties High costs of living and income gaps Problems related to lifestyle adjustments. such as spouse dissatisfaction.

M.Expatriate Adjustment Process The series of phases expatriates undergo while adjusting to a foreign culture that include: Initial euphoria Cultural shock Adjustment Re-entry Chapter 17: International Human Resource Management     Copyright @ Oxford University Press International Business R. Joshi .

Repatriation The process of returning home by an expatriate after completion of foreign assignment that include:  Preparation    Physical relocation Transition Re-adjustment Copyright @ Oxford University Press International Business R. Joshi Chapter 17: International Human Resource Management . M.

M. Copyright @ Oxford University Press International Business R. of attitude.Training Training: The process by which employees acquire skills. and skills of personnel increase performance employees. knowledge. Training so as to aims at altering the behaviour. and abilities to perform both their current and future assignments in the organization. Joshi Chapter 17: International Human Resource Management . knowledge.

Pre-departure Training for Overseas Assignments  Cultural sensitization programmes Preliminary visit   Language training Practical training  Copyright @ Oxford University Press International Business R. Joshi Chapter 17: International Human Resource Management . M.

Performance Management The process that enables a firm to evaluate the performance of its personnel against pre-defined parameters for their consistent improvements so as to achieve organizational goals. Copyright @ Oxford University Press International Business R. The system used to formally assess and measure employees’ work performance is termed as performance appraisal. Joshi Chapter 17: International Human Resource Management . M.

M. A good compensation system should be designed within the regulatory framework of the country of operation of an MNE and should be able to attract and retain the best available talent Copyright @ Oxford University Press International Business R. salaries. pay rise. It includes wages.Compensation The financial remuneration that employees receive in exchange of their services rendered to the organization. Joshi Chapter 17: International Human Resource Management . and other monetary issues.

Joshi .Key Components of International Compensation Systems    Base salary: Foreign service premium: Allowances:        Hardship allowance Cost of living allowance (COLA) Housing allowance Home leave allowances Education allowances Relocation allowances Assistance for tax equalization Chapter 17: International Human Resource Management Copyright @ Oxford University Press International Business R. M.

Joshi Chapter 17: International Human Resource Management . M.Strategic Approaches to International Compensation  Home-country-based Host-country-based Hybrid of the above two   Copyright @ Oxford University Press International Business R.

and sexual harassment at workplace in countries of their operations which often have considerable differences. M. immigration. Copyright @ Oxford University Press International Business R. compensation and benefit laws.Regulatory Framework and Industrial Relations International firms are required to adhere to various legislative provisions under the labour laws. Joshi Chapter 17: International Human Resource Management . discrimination. and individual rights laws related to civil rights.

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