You are on page 1of 26

By: AYUSHI JAIN VIJETA SHARMA

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.

Global competition Growth in mergers, acquisitions and alliances Organization restructuring Advances in technology and telecommunication

Need for flexibility Local responsiveness Knowledge sharing Transfer of competence

Developing a global mindset More weighting on informal control mechanisms Fostering horizontal communication Using cross-border and virtual teams Using international assignments

Encompasses more functions, More heterogeneous functions, Involves constantly changing perspectives, Requires more involvement in employees personal lives, Influenced by more external sources Involves a greater level of risk than typical domestic HRM.

Integration of the worlds economies and business globalization continues unabated International trade is growing more rapidly than world output Foreign direct investment (FDI) flows are increasing The number of cross-border, inter-firm agreements has risen dramatically Social, economic, and political developments throughout the world changed the way global business is conducted

The external environment greatly influences HRM activities Each country has its own:

Laws Business customs Workforce characteristics Political climate The most difficult challenge to overcome is the people challenge

Managing international assignments Employee and family adjustment Selecting the right person for a foreign assignment Culture, communication and gauge Language and communication

Clarifying taxation issues Coordinating foreign currencies, exchange rates Compensation plans Working directly with the families of employees More involvement in employees personal life, facility etc. Different HR systems for different geographic locations More complex external constituencies, foreign Governments, political and religious groups Heightened exposure to risks such as health, terrorism, legal issues, human and financial consequences of mistakes

High failure rates of expatriation and repatriation Deployment getting the right mix of skills in the organization regardless of geographical location Knowledge and innovation dissemination managing critical knowledge and speed of information flow Talent identification and development identify capable people who are able to function effectively Barriers to women in IHRM International ethics Language (e.g. spoken, written, body)

Different labor laws Different political climate Different stage(s) of technological advancement Different values and attitudes e.g. time, achievement, risk taking Roles of religion e.g. sacred objects, prayer, taboos, holidays, etc Educational level attained Social organizations e.g. social institutions, authority structures, interest groups, status systems

Cultural differences between nations can influence the effectiveness of HRM policies and practices HRM must be congruent with the cultural orientation of the workers Hefstede says cultures vary in five dimensions:

Individualism versus collectivism Power distance Avoidance of uncertainty Masculinity Long-term versus short-term orientation

Fit is the degree to which HRM policies are congruent with the: Strategic plan of the organization Work-related values of the foreign culture Internal fit: making sure HRM policies facilitate the: work values and motivation of employees External fit: the degree to which HRM matches the: context in which the organization is operating

Internal Fit Concerned with making sure that HRM policies facilitate the work values and motivations of employees Policies must be structured in ways that allow headquarters and foreign subsidiaries to interact efficiently

External Fit The degree to which HRM matches the context in which the organization is operating The organization must understand the cultural and socioeconomic environment of the foreign subsidiary

Discrepancies in International compensation: The discrepancies most cited are listed in the order of how often they were mentioned as being major problems:

Base Salary Overseas Premiums Housing Allowances Education Allowances Cost of Living Allowances Tax Equalization Repatriation Allowances Performance Based Incentive

The biggest HR challenge facing any globally oriented corporation is finding competent managers An expatriate manager (PCN) comes from the corporations home nation Relocation can be troublesome, regardless of the managers country of origin The challenge is to capitalize on the diversity of a global workforce without suppressing cultural heritage

Managing the expatriates adjustment process is a primary focus of GHRM The difficulty of this task has increased because sales and production shifted closer to markets There is higher use of host country and third country management There is a concurrent increase in the number of inpats Both inpats and expats can have a difficult time adapting to their new surroundings

Factors associated with expatriate success:

Good technical and language skills Strong desire to work overseas Specific knowledge of overseas culture Well-adjusted family situation Complete support of spouse Behavioral flexibility Adaptability and open-mindedness Good relational ability Good stress management skills

High Probability for Success


Strong analytical skills Good language skills Strong desire to work overseas Specific knowledge of overseas culture Well-adjusted family situation Complete support of spouse Behavioral flexibility Adaptability and openmindedness Good relational ability Good stress management skills

Low Probability for Success


Uncertain technical competency Weak language skills Unsure about going overseas Family problems Low spouse support Behavioral rigidity Unadaptability closed to new ideas Poor relational ability Weak stress management skills

International business is conducted in a maze of:


International trade agreements Parent country laws Host country regulations

Ethical behavior challenges may also be encountered:


Environmental regulation, may be weaker Gift giving or greasing may be common practice

Regulations regarding employment discrimination vary from country to country Ethical dilemmas between profits and the preservation of basic human rights may also exist Resolving ethical issues is not an easy task

Labor relations issues that may arise in the international environment:

Unions Labor laws Less emphasis on written contracts How much participation employees are entitled to in HRM policies

Employee participation is guaranteed in Germany

South Koreas giant industrial firms, the chaebol, control every aspect of workers lives
In Singapore, annual wage adjustments are set by a national council and strikes are nearly impossible

Government business regulations may differ

There is no simple solution to the labor relations problems with which MNCs and GCs are confronted

Labor has been trying to establish global labor organizations