Globalization and HRM

Why International Human Resource Management? 

Increasing globalization, firms and employees in them moving all over the world.  Major problems in international operations because of human resource management blunders  Hence need to understand human resource management in a global perspective

Why International Human Resource Management? (cont¶d) 

The role of HR in International Operations  Managing a Multicultural Workforce  Developing Managerial Talent in a Global Business Environment


Globalization. Complexity and IHRM Globalization and New Technologies New Environment ± Increased Environmental Uncertainty More Complexity More Dynamism Less Richness 1±4 . Uncertainty.

Hypercompetition Need to Refocus on Persons. Complexity. Roles and Integration for Global Performance HR Capabilities People Processes Persons in Roles 1±5 .Globalization and importance of IHRM Uncertainty.

p. Workforce America: Managing Employee Diversity as a Vital Resource. 1±6 .Diversity as an Organizational and HR Challenge in MNE Source: Marilyn Loden and Judy B. Rosener. 20.

A Definition of Human Resource Management ‡ Human Resource Management (HRM) involves all management decisions and practices that directly affect the people who work for the organization. ³Human Resources´ the people who work for the organization organization. ‡ 1±7 .

 ³Management´ represents the role of HRM as part of management that implies that it¶s not only an administrative function that carries out the formulated policies but also a managerial function that contributes to strategy formulation. 1±8 .A Definition of Human Resource Management (cont¶d)  ³Human´ represents the dimension of HRM which relates to the soft aspects such as commitment of employees through participation and the most important assets being the employees.  ³Resource´ represents the hard aspects such as the strategy link of HRM and the importance of efficient utilization of employees.

The General Field of HR  Major Functions and Activities ± Human resource planning ± Staffing ‡ Recruitment ‡ Selection ‡ Placement ± Performance appraisal ± Training and development ± Compensation and benefits ± Industrial relations 1±9 .

What does IHRM add into the Traditional Framework of HRM? ‡ Types of employees ± Within and cross-cultural workforce diversity ± Coordination ± Communication ‡ Human resource activities ± Procurement ± Allocation ± Utilization of human resources ‡ Nation/country categories where firms expand and operate ± Host country ± Parent country ± Third country 1±10 .

under this strategy the firms try to create value by emphasizing local responsiveness.under international strategy the firms try to create value by transferring core competencies overseas. ‡ International. 1±11 .The strategic role of International HRM The four strategies that are pursued in the international business are: ‡ Multi domestic.

The strategic role of International HRM ‡ Global. 1±12 .under this strategy the firms try to create value by realizing experience curve and location economies ‡ Transnational.under this strategy firms try to create value by doing all the above things simultaneously.

A Model of IHRM 1±13 .

‡ Geocentric: Seeks the best people for the job regardless of where they come from. 1±14 .STAFFING POLICY ‡ Ethnocentric: All management positions are filled with employees from the parent company ‡ Polycentric: Host country nationals are recruited to manage subsidiaries while management at headquarters is staff by parent-company nationals.

Some Terms Defined ‡ Host Country National (HCN): Belongs to (HCN): the Country where the subsidiary is located ‡ Parent Country National (PCN): Belongs to (PCN): the Country where the firm has its headquarters ‡ Third Country Nationals (TCN): Belongs to (TCN): any other country and is employed by the firm 1±15 .

Each subsidiary Polycentric: has some degree of decision making autonomy. 1±16 .Approaches To International Human Resource Management ‡ Ethnocentric: Highly centralized. ‡ Geocentric: Ignores nationality in favor of Geocentric: ability and competence needs in a worldwide integrated business strategy. ‡ Polycentric: Decentralized. HQ controls Ethnocentric: PCNs dominate. HCNs manage subsidiaries.

Who is an Expatriate?  An employee who is working and temporarily residing in a foreign country ‡ Some firms prefer to use the term ³international assignees´ ± Expatriates are PCNs from the parent country operations. TCNs transferred to either HQ or another subsidiary. and HCNs transferred into the parent country 1±17 .

International Assignments Create Expatriates: 1±18 .

The Expatriate Problem ‡ High Expatriate Failure Rates ‡ Average cost per failure to the parent firm can be as high as three times the expatriate¶s annual domestic salary plus the cost of relocation ‡ Between 16% & 40% of all American employees sent abroad to developed nations. and almost 70% sent to less developed nations return home early 1±19 .

5. Inability of spouse to adjust Manager¶s inability to adjust Other family problems Manager¶s personal or emotional maturity Inability to cope with larger overseas responsibility 6. 4. Difficulties with new environment 1±20 .Reasons for Expatriate Failure 1. 2. Lack of technical competence 7. 3.

administrative services  The need for a broader perspective: cater to perspective: multiple needs  More involvement in employees¶ personal lives: lives: adjustment. spouses. culture activities: orientation.Differences between Domestic HRM and IHRM  More HR activities: taxation. children  Changes in emphasis as the workforce mix of expatriates and locals varies: fairness varies:  Risk exposure: expatriate failure. terrorism exposure:  Broader external influences: government influences: regulations. ways of conduct 1±21 .

Differences between Domestic HRM and IHRM: variables ‡ Complexity involved in operating in different countries. varied nationalities of employees ‡ The different Cultural Environment ‡ The industry or industries with which the MNC is involved ‡ Attitudes of Senior Management ‡ Extent of reliance of MNC on home country domestic market 1±22 .

Variables that Moderate Differences between Domestic HR and IHRM 1±23 .

Expatriate Selection ‡ Self orientation ‡ Others orientation ‡ Perceptual ability ‡ Cultural toughness 1±24 .

Factors that Influence the Global Work Environment 1±25 .

and time) typically by the corresponding manager or supervisor 1±26 . cost.Performance Appraisal ‡ Is a method by which the job performance of an employee is evaluated (generally in terms of quality. quantity.

1±27 .site manager¶s appraisal. than to the manger to make the appraisal more authentic. ‡ The home country officer while preparing the appraisal should consult an on.Guidelines for Performance Appraisal ‡ More weight should be given to on site manager¶s appraisal.

Compensation ‡ ³All forms of financial returns and tangible services and benefits employees receive as part of an employment relationship" 1±28 .

Expatriates Pay ‡ Base salary ‡ Foreign Services Premium ‡ Allowances ± hardship allowances. ± cost of living allowances and ± education allowances ‡ Taxation ‡ Benefits 1±29 . ± housing allowances.

1±30 .

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