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Managing global HR

Meaning of International HRM

Globalisation of business has probably touched the HR manager more severely than any other functional head. HR executive needs to give international orientation to various HR sub systems viz. hiring, T & D, PMS, compensation, IR, etc Just as success of a domestic business depends on its HR, so is the case with an international business. Resources cannot be effectively utilised/transferred to foreign affiliates without using human power. An international business must procure, motivate, retain & effectively utilise the services of its people both at corporate head offices & at the foreign plants. This process of procuring, motivating, retaining & effectively utilising people is known as IHRM.

Model of IHRM

HR Activities

Procure Allocate Utilise

Types of employees

Parent country nationals Host country nationals Third country nationals Home country/Parent country Host country Third country


Domestic HRM V/S IHRM

More HR Activities Need for a broader perspective More involvement in employee personal lives Changes in emphasis as the workforce mix of expats & local vary Risk exposure More external influence

Managing IHR Activities

HRP Recruitment & Selection Training & Development Performance Management Remuneration Repatriation Employee Relations Multicultural Management

Organisational Effectiveness

1. HRP
Key issues in international HRP Identify top management potentials Identify critical success factors Provide developmental opportunities Maintaining commitment to individuals in international career path Strategic business planning Dealing with multiple business units while attempting to achieve globally & regionally focused strategies

2. Recruitment & Selection

Approaches to staffing Selection decision from three categories of employees Factors favouring PCNs & HCNs Expatriate problem

Expat assignment life cycle Reasons of expat failure Factors in expat selection

Approaches to staffing

Ethno centric Approach

All key management positions across all subsidiary are held by parent country nationals Staffing requires host country nationals to be hired to manage subsidiaries, while parent country nationals occupy key positions at corporate HQ

Poly centric Approach

Geo centric Approach

Best people for the key jobs through out the organisation, regardless of nationality

Selection decision from three categories of employees


Advantages & Disadvantages of each is to be explained.

Factors favouring PCNs & HCNs

Characteristics Parent country characteristics Description cultural difference b/w parent unit & subsidiary Size of operations Research intensity Financial institutions Need for control Need to customise

Industry characteristics

Factors favouring
Characteristics Description Subsidiary characteristics Age Experience Performance Ownership pattern Host country variables Education Political risks Cost of living

Expatriate problem - Expat assignment life cycle

Determining the need for an expat Selection process Pre assignment training Departure Post arrival orientation & training Crisis & adjustment Re assignment abroad Repatriation & adjustment Crisis & failure Repatriation & adjustment

Expatriate problem - Reasons of expat failure

Inability to adjust in host country U shaped curve Tourist stage Disillusionment Cultural shock Adaptation & adjustment

Expatriate problem - Factors in expat selection

Technical ability Cross cultural suitability Family requirements MNC requirements Language Country cultural requirements

3. T & D

Cross cultural training Language training Practical training Management development strategy HCN training

4. PMS

Steps in expat Performance Management Linkage to organisational strategy Setting individual performance goals SMART Goals Identifying variables impacting performance Compensation package Task characteristics HQs support Host environment Appraise the performance Provide regular feedback Provide opportunities for improvement Linking results with rewards

5. Remuneration

Objectives Problems Factors influencing international compensation Components of international compensation Tailoring the package


Attract employees Facilitate movement of expat Reasonable relationship Cost effective

Discrepancies in pay b/w parent, host & third country Life cycle stage of expat family Re-entry into home country Frequent changes

Factors influencing international compensation

MNC Internal environment Goal orientation Capacity to pay Competitive strategy Organisational culture Internal workforce composition Labour relations Subsidiary role MNC External environment Parent nationality Labour market characteristics Local culture Home & host country governments role Industry type Competitors strategies

Components of international compensation

Base salary Benefits Allowances Incentives Taxes

Tailoring the package

Balance sheet approach Going rate approach Lumpsum Cafeteria approach Regional system

6. Repatriation

Meaning Reasons for repatriation Advantages Process Challenges


Activity of bringing expatriate back to home country Re-entry shock or reverse culture shock Ability to attract future expat depends on how well firm handles its repatriation process

Reasons for repatriation Advantages

Period of posting got over Wants their children in home country school Not happy in the overseas assignment Failure to do the job

Developed global culture + local culture Operations of HQ + subsidiary firms Expand international prospects



Preparation Physical relocation Transition Re-adjustment

Individual perspectives Organisational perspectives

7. Employee Relations

Key issues in international labour relations

Who should handle labour relations

HQ Subsidiary

What should be the union tactics

Strikes Lobbying ITSs ILO, UNCTAD, EU, OECD

8. Multicultural Management

Hofstedes cultural dimension

Power distance Uncertainty avoidance Individualism Masculinity Future orientation