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Managing Human Assets

. – allocating. and – effectively utilizing human resources – in a multinational corporation.What is IHRM? • International HRM (IHRM) is the process of: – procuring. while – balancing the integration and differentiation of HR activities in foreign locations.

IHRM – encompasses more functions – involves constantly changing perspectives – requires more involvement in employees’ lives – is influenced by more external sources – Cultural difference across countries. and finally – involves a greater level of risk than typical domestic HRM . IHRM • Compared to Domestic HRM.Domestic HRM vs.

and compensation programs to each country. may require companies to adapt their hiring. firing. training.Complications for IHRM compared to HRM International HR managers face a more complex task than their domestic counterparts • Differing cultures • Levels of economic development • Legal systems among countries So. .

• Training and development in an international firm may be more complex than in a domestic firm.Complications for IHRM compared to HRM • Firms must decide whether managers will be selected from the home country. . • Compensation systems must be adapted to meet the needs of each country’s labor market. from the host country or from third countries.

Femininity •Structure of firm’s international operation •Inflation •Labor availability & quality . Collectivism Power distance Uncertainty avoidance Masculinity vs.IHRM in MNC: Key Issues • Cultural differences across countries Dimensions of culture • • • • Individualism vs.

obligations. duties determine social behaviours Help in designing the Reward System in an organization: integral part of MCS If culture is highly individualistic  use individual incentives for motivation If culture is highly collectivist  use group based incentives for motivation . cost-benefit analysis determine social behaviours COLLECTIVISM • Self = Interdependent • In-group goals have priority • Norms.Individualism / Collectivism Determines how an individual see himself: as an individual entity or as a part of group INDIVIDUALISM • Self = Independent • Personal goals have priority • Attitudes.

Power Distance Means the extend to which employees understand & accept unequal distribution of power SMALL • All should have equal rights • Powerful people should try to look less powerful • Senior people are neither respected nor feared • Inequalities in power and wealth minimized LARGE • Power holders are entitled to privileges • Status symbols and hierarchies accepted • Senior people are respected and feared – need for dependence • Inequalities in power and wealth maximized In context of MCS: Employee with High on power distance prefer Centralization Employee with Low on power distance prefer Decentralization .

Uncertainty Avoidance Who avoid taking risk WEAK • High tolerance for ambiguity • Less risk averse • More comfortable in unstructured situations – less anxiety STRONG • Low tolerance for ambiguity • More risk averse • Structure seeking – more anxiety over the unknown .

Masculinity / Femininity Strong drive for achievement MASCULINITY • Performance society • More achievement/money Oriented •Demand more autonomy & freedom at work place FEMININITY • Welfare society • More quality-of-life oriented • Can perform well in Centralized organization In context of MCS: Employees demand more autonomy prefer Decentralization & performance based rewards •Structure of firm’s international operation .

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Educational. and Technological Development in the Host Country – Home and Host Country Cultures – International Experience of the Firm .Approaches to IHRM (cont’d) • Factors Affecting the Approach to IHRM – Political Policies and Legal Regulations – Managerial.

Approaches to IHRM (cont’d) • Factors Affecting the Approach to IHRM (cont’d) – Method of Subsidiary Founding – Technology and the Nature of the Product – Strategic Importance of Particular Employee Groups – Organizational Culture – Organizational Life Cycle .

HRM plays a vital role in crafting creative business strategies BPR at Mahindra & Mahindra Ltd. • Suffering from manufacturing inefficiencies. • Enforced concrete HR policies – used the “churning effect”. stretched production cycle and poor output. • Introduced BPR in 1995 • Scheme focused on reformulating the way the company carried out its business. .

(Contd. • Began outsourcing non-core manufacturing activities. .) • Got rid of multi-layered structure and adopted a flat structure.BPR at Mahindra & Mahindra Ltd. • Encouraged team work • Capitalized on its existing employee talent through intensive retraining and redeployment strategies.

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