INTERNATIONAL HUMAN RESOURCE MANAGEMENT

GROUP MEMBERS: GITIKA - 59 HIMANSHI - 29 JASPREET - 14 MEGHA - 15 TANU CHATURVEDI - 17 SHILPI - 35

DEFINITION OF IHRM
Employers rely on International Human Resource Management (IHRM) to deal with global HR challenges. Thus IHRM can be defined as:

Model of IHRM

Differences between Domestic HRM and IHRM
More HR activities

Need for broader perspective

More involvement in employees’ personal lives

Changes in emphasis as the workforce mix of expatriates and locals varies
Risk exposure

Broader external influences

.More Human Resource Activities HR Planning • Difficulty in implementing HR procedure in host countries. Employee Hiring • Ethnocentric. polycentric or geocentric approach to staffing. Training & Development • Cultural training. • Selection of expatriates. • Providing developmental opportunities for international managers. • Training in manners and mannerisms. • Managing repatriation process. • Language training.

. • Union tactics in subsidiaries. • Minimizing discrepancies in pay b/w parent. Industrial Relations • Handling of industrial relations problem in a subsidiary. host & third country nationals.More Human Resource Activities Compensation • Devising appropriate strategy to compensate expatriates. Performance Management • Constraints while operating in host countries need to be considered. • Attitude of parent company towards unions in a subsidiary. • Identification of raters to evaluate subsidiary performance.

Nepotism • Earlier hiring relatives was an accepted practice especially in small businesses. Gender Based Pay • Korea. Promotions • Countries also differ on basis of promotion. Japan & Indonesia believes that a family man should be paid more for the same job than a single woman. . merit or other factors. this is changing as can be seen in Hong Kong & Singapore. Singapore. • Korean & Japanese firms insists on existing staff working long hours.. • However.Need for Broader Perspective Broader perspective is required on even the most common HR activities. Overtime • Australian & Singaporean firms add staff when workload increases. i..g. length of service. For e.e.

Risk Exposure • • • • Employee’s physical safety. political figures.More Involvement in Employee’s Personal Lives • For effective management of both parent country & third-country nationals. and all aspects of remuneration packages for foreign assignments. . Seizure of MNC’s assets if HR policies antagonize with host country. Changes in Emphasis • Need for parent country and third-country nationals declines. more trained locals become available. • Resources reallocated to staff selection. • Housing arrangements. and a greater variety of economic and social interest groups. External Influence • The Subsidiary HR managers have to deal with ministers. Kidnapping & Terrorism. training and management development. health care. Poor performance represents huge financial losses for firms.

Basic Steps in IHRM Human Resource Planning Recruitment & Selection Training & Development Repatriation Remuneration Performance Management Employee Relations Multicultural Management .

versa Providing developmental opportunities Dealing with multiple business units while attempting to achieve globally & regionally focused strategies .Human Resource Planning Identifying top management potential early Tracking & maintaining commitment to individuals in international career paths Identifying critical success factors for future international managers Tying strategic business planning to HRP and vice.

.g.g. Philips. ColgatePalmolive . • E. • E. • E.g. • This may be apt for the early stages of international business.Recruitment & Selection 3 approaches to staffing are:Ethnocentric Approach Polycentric Approach Geocentric Approach • All key management positions are held by parent country nationals. • Host country nationals hired to manage subsidiaries. • Parent country nationals occupy key positions at corporate headquarters. Procter & Gamble. regardless of nationality. HUL • This approach seeks the best people for key jobs throughout the organization...

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Classifying Employees •Parent country nationals (PCNs) Are employees from the country in which the organization is based (Headquarters) •Host country nationals (HCNs) Are employees from the country in which the subsidiary is based i. Not a PCN or TCN) .e.e. A French person working in an organization based in France •Third country nationals (TCNs) Are employees who are working in a different country (i.

cultural and legal environment Technical and managerial competence Excessive costs involved in selecting and developing expatriate managers Effective liaison and communication with parent country staff Family adjustment problems . policies and practices Disadvantages Difficulties in adapting to the foreign language and the socioeconomic. political.Advantages & Disadvantages of using PCNs Advantages Familiarity with the parent organisation’s goals. objectivities.

Advantages & Disadvantages of using HCNs Advantages Familiarity with the socioeconomic. political and legal environment and with business practices in the host country Lower costs incurred in hiring staff in comparison to PCNs and TCNs Provides opportunities for advancement and promotion to local nationals and increases their commitment and motivation Responds effectively to the host country’s demands Disadvantages Difficulties in exercising effective control over the subsidiary's operation Communication difficulties in dealing with the parent company Lack of opportunities for the home country’s internationals to gain international and cross cultural experiences .

Advantages & Disadvantages of using TCNs Advantages Perhaps the best compromise between securing needed technical and managerial expertise and adapting to a foreign cultural environment Disadvantages Host country’s sensitivity with respect to nationals of certain countries TCNs are usually career international business managers with a wealth of experience Local nationals are impeded in their efforts to upgrade their own ranks and assume responsible positions TCNs are usually less expensive to maintain than PCNs TCNs may be better informed about their host environment than PCNs .

•The cost of using expatriates is high so it is essential that they are carefully selected and developed. From short visits of days/weeks to longer terms of months/years. •They can either work for the organization already in their home country or can be recruited externally. •Their assignments can vary in length and purpose. •Effective pre-departure training is essential to support the employee to adapt to a new culture and country – as well as a new job. .Expatriates •Expatriates are employees who go to work in another country.

Expatriate Assignment Life Cycle Determining the need for an expatriate Crisis & Adjustment OR Reassignment Abroad Departure Post-arrival Orientation & Training OR Crisis & Failure Repatriation & Adjustment Selection Process Pre-assignment training .

Reasons of Expatriate Failure .

and • to know how to appropriately respond. • to predict what will happen next. .Culture shock Culture shock is a sense of discomfort brought about by the inability • to interpret the world around you.

Culture Shock Cycle High Tourist/ Honeymoon Stage Adapting or Adjustment Stage Mood Disillusionment Stage Low Months in a new culture .

• English is the primary Lang in all countries.house training prog helps new managers to socialize & imbibe the values n norms of the firm. • Speaking only English can be a disadvantage for country like CHINA.Training and Development • Its belief is understanding the host country’s culture will help the manager empathize with the culture. Cross Cultural Training Language Training Practical Training • It seeks to help the expatriate manager and family feel ‘AT HOME’ in the host country. . Management Development & Strategy • In.

• General awareness of the parent country cultural norms. • Role of subsidiary in the MNCs road map both from technological as well as corporate culture perspective.how specific to organization.HCN Training Focuses on: • Gaining knowledge about the parent organization and its global presence and objectives. • Acquisition of technical know. .

Expatriate Performance Management • Steps in Expatriate Performance Management: Linkage to organisational strategy Setting individual performance goals Identifying variables impacting performance Providing opportunities for improvement Providing regular feedback on progress towards goals Appraising the performance Linking results with rewards .

Paying Expatriates Salary Taxes: -Equalisation -Protection Expat Compensation Benefits Incentives Allowances .

Approaches to Designing the Pay Package Balance-sheet approach Going-rate approach Lump sum method Cafeteria approach Regional approach .

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Repatriation Benefits Imbibed global culture and also have understood local culture Understanding how the company is perceived in other countries Understand both the operations of home as well as host countries Reasons Period of positioning got over Not happy with their overseas assignments Children’s education .

Repatriation Process Preparation Physical Relocation Transition ReAdjustment .

UNCTAD.Employee Relations Handling Labour Issues • Delegated to foreign subsidiaries • Labour relations centralised when inter-subsidiary production integration is present • Depends on nationality of ownership of subsidiary • More intervention when subsidiary is of strategic importance Union Tactics • Strike  most common tactic • International Trade Secretariats (ITS) • Lobbying for restrictive national legislations • Intervention of ILO. EU & OECD • Principles of ILO • Freedom of associations • Right to organise & collectively bargain • Abolition of forced labour • Non-discrimination in employment 30 .

norms & values that guide behaviour of people in a society or passed on from one generation to the next  Multiculturalism – people from many cultures (countries) interact regularly Benefits • • • • • Greater creativity & innovation Sensitivity in dealing with foreign customers Possibilities of hiring best talent ‘Super organisational culture’ Universally acceptable HR policies & practices . beliefs.Multiculturalism  Culture – customs.

Power Distance Individualism Hofstede’s Cultural Dimension Uncertainty avoidance Masculinity .

Assessing Culture .

Hofstede’s model is used to select the better location for the new operation base and generate recommendations on recruitment and selection. . Culture difference & similarities. A recommendation of how to manage staffing successfully is given based on the choice of India. • It is concluded that India is the better location for the new operation. • Russia as another location option is examined and compared with India in terms of meeting the business objectives and management expectations.CASE STUDY OF IHRM IN A MNC • This study evaluates the benefits and difficulties of setting up an operation base in India which will carry the same responsibilities and functions as the other operation bases.

India and UK JAPAN--Europe & Pacific Rim (except Australia) FRANCE--France. Distribution to the countries in its allocated geographic region. Australia. however they are only responsible for the sales and minor servicing of the products. Responsible Regions: USA--America. Microchips & Memory products for utilisation with mobile telecommunications • Functions 1. Distribution. 2. Manufacturing. Other cutting-edge telecommunication products.• • Operation Bases USA JAPAN FRANCE CHINA • • Industry Electronics & Telecommunications Products 1. • • • . 3. 3. Manufacturing. Africa and Middle East CHINA--Far east(except Japan) Sales Branches: The MNC (Multinational Corporation) also has branches in the majority of the countries where it sells its products. Sales of the products to each particular base country. Mobile phones 2. R&D. Marketing. Marketing.

certain R&D facilities will be introduced. . • Human Resources Management: the human resource structure for the new operation base would be 40% local employees. 60% mixed from at least two bases of the existing four bases.• . After those operations are securely established. Plans for the new operation base • Project Schedule: The new operation base will firstly function as a production base for certain products and be responsible for its domestic market. as well as the other regional markets.

HR. the new operation base must be similar or complementary to the existing four bases. First. it should be able to add values to the MNC as a part of its globalization on culture. there are four main criteria that should be considered. ensure the productivity. • From the four criteria it’s clearly shown that the purpose of setting up a new operation base is for sufficiently supplying products for the local & neighbouring regions and developing local markets. efficiency and market penetration to meet the development of MNC. Social. Economic. Fourth. knowledge. .• . Environmental and Legal). Second. Technological. it should be easier for the non-local employees to adapt the local culture and business style. • By choosing one from these two. Criteria for choosing the new operation location: • After the preliminary research based on PESTEL analysis (Political. therefore local market development. the new location is to be in either Russia or India. it should take less time to generate profit. logistics and markets. productivity and logistics become the highest priority. Third.

( Moscow Metro hit by deadly suicide bombings . It’s impossible to identify which is a better location. however the large population of India provides a solid market resource. • • • . have invested in mobile phone manufacturing in India since 2005. it is obvious there are some similarities. a growing customer base and comparable costs. which indicates India is a better global choice in terms of competitively low labour cost. Geographically too india is favourable as a location. the key question which is left to be answered in terms of decision making should be which location could facilitate MNC to build up the value chain in the shortest time period especially addressing the performance of productivity and marketing. According to the culture and business style comparison . India is much more reliable than Russia. terrorisms happened recently such as the metro bombing in Moscow. To answer this question the comparisons of the culture. Chechen terrorists has been a cancer of Russia for years. other factors include a highly skilled and educated workforce. production establishment. favourite political policies. However from the manufacturing production practice. Hyundai etc. business style. and convenient logistics . local market and logistics points of view. Nokia. complementarities and conflicts between Russia and the existing four bases as well as India. while there is none in Russia. India is comparably ideal. and the existing distribution channels explored by the American operation base would facilitate the further local marketing activities. In terms of local market .360 degree comparison between Russia and India • Based on the above narrowed down criteria after the study of the macro and industrial environments in Russia and India. Beside this. local market and logistics are required. LG. BBC News. Empirically the large mobile phone producers such as Elcoteq. In terms of political stability and social security which are vital elements in big investment decision making. 2010). its true that apparently Russia seems to have a big consumer base. abundant material resources. although culture differences are crucial for global business development.

motivating human resource management system and effective managing people practices especially in a multinational environment is a valuable. Choosing India does not mean the expected profit could be obtained easily. . Because highly qualified employees. • According to Budhwar & Boyne (2004) study. non-substitutable. • Nowadays most businesses are competing more on human resources. cultural similarity and comparable lower production cost. rare resource for any MNC. inimitable. India should cover the Middle East market instead of France. Therefore how to staff the facility in India is crucial to the whole project. the HRM(human resource management) practice in Indian organizations are structured and rationalized. which means its special culture contexts do not impact business behaviour as strongly as before.Recommendations on location and staffing • Due to the logistics convenience.

The Role culture means the role a person serves within the organization is considered more important than the personality or individual who occupies that role . • Considering the manufacturing nature of the new Indian base. the Role culture is highly recommended to be built as the core culture of the organization. favourable organizational culture in order to integrate business.Create Favourable Organizational Culture • It is helpful and important for a MNC employing people from different cultural backgrounds to create a unique.

al 2003) It could be based on the personality fitness assessment. then working skills should be considered. not everyone who is willing to work in India could be offered a position. thrift. high power distance. It should mainly depend on individual personality as well as considering the individual personal culture. which is reflected in different work values and communication styles. some are opposite. some are similar to French. There is a common HRM practice that should be noticed that Indian people tend to recruit their relatives. (Hendriks et. the only difference would be the personal culture should lean to the company culture. some cultural features are similar to Americans’. even though they might have the right skills. clients) behaviours such as: collectivism.Recruitment and Selection • Recruiting the right expatriates and local employees are crucial at the start-up stage. respecting knowledge and education. According to Spony’s study. It is impossible and unnecessary to limit the 60% expatriates within certain countries. The same approach should be used in recruiting the local employees. A fixed selection process with detailed and clear criteria and objective measurements and a structured interview are needed in terms of justifying the employee selection. After all the most crucial and initial HRM achievement should be creating a unique company culture which fits into the Indian culture. all the five factor personality inventory is a valid and reliable instrument to compare personalities and that the personality correlates across cultures. India as a country with its long history and famous ancient civilization has its own unique culture which dominates peoples’ (employees. Due to the culture and business style differences. According to Hendriks et. the wrong selection would either slow down or cause the whole project to fail. • • • • • • . some are totally opposite. . competitors. low uncertainty avoidance etc. Therefore the criteria and priority for the selection of expatriates should be based on their personal work values and communication styles that would fit into the Indian culture and their personalities which would fit the position they are being selected for. individuals from the same culture background could have huge difference on personal preference with respect to tasks and relationships.

2005. (Saini.71-81) . Honda India’s experience proved the company culture training could reduce the culture conflicts. ISO14000 etc. pp. philosophy training and skill & technology training required for the different jobs.• 4 Training • • Based on the human resource structure. training on the host country culture would help them align into the culture more rapidly and smoothly. a normal inprocess employee training and expatriates’ awareness of culture differences training are required. such as total quality management. The normal in-process employee training should include organizational culture. Although the expatriates are chosen by their personalities and individual culture.

• Website link for case study: http://judyzprouse.html • Date of case study: july 2010 .blogspot.com/2010/07/cas e-study-of-ihrm-of-mnc.

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