This action might not be possible to undo. Are you sure you want to continue?
Adhangale Deepika Bhopale Shraddha Gawade Kavita Marathe Arpita Mathur Neha Khandelwal
01 16 28 51 53 43
If the MNC is simply exporting its products, with only a few small offices in foreign locations, then the task of the international HR manager is relatively simple. the approach to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and cultural settings. This problem of balancing integration and differentiation have long been acknowledged as common dilemmas facing HR and other functional managers in global corporations.
Specifically compared with domestic HRM. (2) has more heterogeneous functions. (4) requires more involvement in employees‟ personal lives. (5) is influenced by more external sources. IHRM (I) encompasses more functions. (3) involves constantly changing perspectives. IHRM requires a much broader perspective on even the most common HR activities. International HR managers must deal with varied issues . and (6) involves a greater level of risk than typical domestic HRM.
A final aspect of the broader scope of IHRM is that the HQ-based manager deals with employee groups that have different cultural backgrounds. they are also relevant to the HR manager located in a subsidiary. the international HR manager is faced with a great variety of national and international pay issues. Although such issues are important for the HQ-based manager. Even when dealing with one particular HR function area such as compensation. . In the case of fringe benefits provided to host company employees. some interesting complications might arise.
willingness with which they work and the commitment they exhibit towards the organization determine the competitive edge of an MNC in the international market. Globalization of business has probably touched the HR manager more severely than any other functional head Just as the success of domestic business depends on its human resources. The type of people. so is the case with international business. . The HQ-based manager may have to set equal employment opportunity (EEO) policies that meet the legal requirements of both the home country and a number of host countries.
Types of employees HR activities HRM Countries of operation .
. “Human Resources” the people who work for the organization. Human Resource Management (HRM) involves all management decisions and practices that directly affect the people who work for the organization. “Resource” represents the hard aspects such as the strategy link of HRM and the importance of efficient utilization of employees. “Management” 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. “Human” 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.
Exporting: Licensing: Franchising: Foreign direct investment: .
Economical Factors. Labour cost . Perspective influences practices. major factors that form perspective for international HRM and in turn influence HRM practices are scanned as. . The Cultural Factors.
which influence the behavior of people in the organization. shared feelings and perceptions. and moral by people. norms. values. Organizational culture means a pervasive underlying set of beliefs. assumptions.Cultural factors: • • • Culture means shared beliefs. values. The research work of Geert Hofstede undertaken into IBM using the responses of managers from 66 different countries produced some interesting evidences on cultural differences. .
In his study. Uncertainty avoidance (UAI). The research of Geert Hofstede undertaken into IBM using the responses of managers from 66 different countries produced some interesting evidences on cultural differences. Hofstede found that socities differ on four primary dimensions which he called: Power distance (PDI). Individuality (INV) Masculinity (MASC). .
and the French feel much a greater need for rules and regulations than do the Swedes and the British. . while at work place.Power distance ( PDI ) By power distance means the extent to which the members of a society accept that power in institutions and organizations is and should be distributed equally. the Indians. For e. Uncertainty Avoidance( UAI ) Uncertainty avoidance means the creation of set of rules and structures to eliminate ambiguity in organizations and support those beliefs that are promising for certainty and conformity.g. Germans. The attitude of uncertainty avoidance is much frowned on in high PDI countries like Philippines and Germany.
Individualism Individualism means the degree of preference of individuals expected to look after themselves and their immediate families. that is. men are supposed to be assertive. Masculinity: It means the extend to which the society values assertiveness (masculinity) and caring (femininity). Masculinity pertains to those societies in which social gender roles are clearly distinct. . tough and focused on material success.
performance. Labour may get remuneration as per performance i. . If the labour cost is high.e. HR practices are also influenced by the differences in labour costs existed in different countries. it can require more focus on labour efficiency which in turn can influence HR practice to shift towards improving labour performance. pay-for.
LABOUR RELATIONS (Industrial relations) FACTORS: It is relationship between employees. . employers and the government that vary from one country to another country and have an enormous bearing on affecting HR practices.
there abound economic differences among nations/countries. Differences in economic conditions or systems cause inter-country differences in HR practices. . Cultural differences. there abound economic differences among nations/countries.ECONOMIC CONDITIONS: Like cultural differences.
From this we can see wide inter-country differences in culture. economic systems. . Hence HR managers need to consider these impacts and evolve HR practices for business operations conducted globally. and labour costs and industrial relations systems affect HR practices.
a) Types of employees b) Human resource activities c) Nation/country categories where firms expand and operate .
Several factors differentiate IHRM from domestic HRM. . The main characteristics of IHRM are: More HR activities Need for a broader perspective More involvement Changes in emphasis Risk exposure More external influences.
For example. the corporate HR manager must co-ordinate pay systems in different countries with different currencies that may change in relative value to one another over time.More HR activities Much broader than managing domestic HR activities. Need for a broader perspective . administrative services for expatriates. while dealing with pay issues. Much broader perspective on even the most common HR activities. international orientation and relocation. and language translation services. host government regulations. Issues connected with international taxation.
More involvement in employee personal lives A greater degree of involvement “International Human Resource Service” of the above programmes and provides service for the parent-country national such as handling their banking. and final repatriation. investments. . home rental while on assignment. co-ordinating home visits.
In IHRM this risk exists and in addition there are other hazards that are unique and more threatening. .Risk Exposure Risk Exposure is high in domestic HRM.
Members of a group or society share a distinct way of life that are transmitted over time in a gradual yet dynamic process.g. An important characteristic of culture is one is not always conscious of its effect on values. . Business person travelling abroad demonstrate differences. .E.A person is not born with a given culture. . attitudes and behaviors.
. -It can lead to negative feelings about the host country and a longing to return home. They experience culture shock-a phenomenon experienced by people who move across cultures. -It can cause psychological disorientation due to misunderstanding.
One in which competition in each country is essentionally independent of competition in other countries like retailing. At one end is the Multi domestic industry .which is not merely the collection of domestic industries but a series of linked domestic industries in which the rivals compete against each other on a truly worldwide basis. Patterns of international competition vary widely from one industry to another. distribution and insurance. At the other end is the Global industry . .
the importance of international operations may be underemphasized in terms of corporate goals and objectives. The changes required to truly internationalise the HR function -“have more to do with states of mind and mindsets than with behaviors.” If senior management does not have strong international orientation . .
managers may tend to focus on domestic issues and minimize differences. . . In such situations.It can cause failure to recognise differences in managing human resources in foreign environment The challenge for the HR manager is to work with top management in fostering the desired “Global mindset”.
many firms. For . a small home market is one of the major motives for “going international”.A pervasive but often ignored factor which influences the behavior of multinationals and resultant HR practices.
awareness of cultural differences is essential for the HR manager at corporate headquarters as well as in the host location. is recognised that culturally insensitive attitudes and behaviors stemming from misguided beliefs are inappropriate - which cause international business failure.
Basic Steps In International HRM
Recruitment and Selection Training and Development Performance Management
O R G A N I S A T I O N A L
E F F E C T I V E N E S S
– top Managements potential early. - critical success factors for future International managers.
The Strategic Management of Human Resources Human Resource Planning
for Organizations, Jobs, and People
select people with skills and who can mix with organizations culture. Dealing with multiple business units while attempting to achieve globally and regionally focused strategies. International HR manager must proceed with the .-Tracking and maintaining commitment to individuals -Tying strategic business planning to HRP and viceversa. .job of hiring the right number of people of the right type. .
Samsung etc. key position in international operations are still held by the home country nationals. followed the ethnocentric approach. such as Toyota. Phillips etc. This strategy is appropriate during the early phases of international business.All key management positions are held by parent country nationals. Firm such as Procter & gamble. In many Japanese and south Korean firms today. This practice was wide spread at one time. .
while parent country nationals occupy key positions at corporate headquarters. . In addition. many countries exert real and subtle pressure to staff the upper management ranks with nationals. unless government interventions dictated selection process. Preference for home country citizens for key positions does not fit in to pattern.The polycentric staffing requires host country nationals to manage subsidiaries.
regardless of nationality. Colgate – Palmolive is an example of a company which follows geocentric approach. .g.This staffing philosophy seeks the best people for key jobs through out organization.. Selecting the best person for the job irrespective of nationality is most consistent with the underlying philosophy of a global corporation. E.
and Head country nationals are transferred into the parent country. . Third country nationals are transferred either to Head Quarters or to another subsidiary. Expatriates are PCNs from the parent country operations. Expatriate play a major role in international business.An employee who is working and temporarily residing in a foreign country.
the subject has assumed considerable importance in their literature non-international business. .Premature return to their home country. Popularly called expatriate failure. Expatriate failure results in considerable losses to MNCs.
Determining need for an Expatriate Crisis & Adjustment Re-assignment Abroad OR Departure Post-arrival Orientation & Training Repatriation & Adjustment OR The selection process Pre-assignment training Crisis and failure .
Other family reasons .Inability of spouse to adjust JAPANESE FIRMS .US FIRMS .Manager’s inability to adjust .Lack of technical competence . .Inability to cope with larger International responsibilities .Inability to cope with larger international responsibilities.Personal or emotional problems .Difficulties with the environment .
. The first step in this direction is to delineate the selection criteria for selecting expatriates.Improving selection procedure to eliminate inappropriate candidates.
cultural Requirements Language MNC Requirements .Technical Ability Cross-cultural suitability Family Requirements Selection Decision Country.
language training. . Training is one of the ways of reducing expatriate failure rate. An expatriate needs pre-departure training before leaving for foreign assignment. the next step in IHRM is to train and develop new hires. An expatriate needs culture training.After selection. and practical training.
An expatriate should receive training in the host country‟s culture. and social and business practices. history. .Seeks to foster an appreciation for the host country‟s culture. politics. economy. religion. which will enhance his or her effectiveness in interacting with hostcountry citizens. The host country‟s culture will help the manager empathize with the culture.
.P Jindal Group. and Ranbaxy. O. Reckitt & Coleman India.Cultural training includes counseling on return to home base to prevent reverse culture shock. Firms which have recognized the importance of cultural training are Mafatlal.
The willingness to communicate in the hostcountry language helps to build good rapport with local employees and improve the expatriate‟s effectiveness.Important part of training. Desirable component of a pre-departure programme. Those who can speak only English are at a distinct disadvantage when doing business in non-English speaking countries like China. .
and can help the family to adapt to an alien culture.Helps the expatriate manager and family feel „at home‟. in the host-country. firms often to integrate the new expatriate family quickly into that group. The expatriate community can be a useful source of support and information. . Where an expatriate community exists.
In-house training programmes and intense interaction during off-site training fosters the esprit-de-corps. shared experiences. as well as competencies. informal networks. Management development programmes help build corporate culture by encouraging new managers to socialize and imbibe the values and norms of the firm. .MNCs use management development as a strategic tool pursuing a multinational strategy.
This philosophy is effective for both giving a shape to a common culture in the company and co-ordinating the firm‟s globally dispersed operations. picnics and sporting events that promote feelings of togetherness.These training courses often include songs. .
and corporate performance.training . Challenging job Recruitment. pre-set goals and targets Comprehensive in nature-multi functional .etc –preassignment issues. subsidiary units. selection . against clearly-defined. while it post-assignment issues Enables an MNC to facilitate continuous improvement of individuals.
A subsidiary‟s performance needs to be assessed in terms of its fulfillment of its headquarters‟ expectations. the constraints within which it functions in a host country need to be taken note of. One such example is: . However. while evaluating a subsidiary‟s performance. MNC has its own specific expectations for each of its foreign subsidiary in terms of market performance and contribution to total profits and competitiveness.
“Sales in Peru may be blooming. How should the headquarters are accounting system handle these sales relative to sales from other subsidiaries that do not consider sales on consignment as firm sales”? Thus the data obtained from subsidiaries may be neither interpretable nor reliable . sales on consignment are counted as firm sales. but the headquarters management was unaware that Peruvian accounting rules.
Developments in communications . Assessment of subsidiary‟s performance is complicated -.physical distance involved. and the frequency of contacts between the corporate head-office staff and the subsidiary management. and the cost of the reporting system. and e-mails do not substitute -. teleconferencing systems.face-to-face contacts subsidiary managers and corporate staff. timezone differences.Internet. . fax machines.
Any expatriate remuneration package needs to be designed to achieve the following objectives: Attract employees . Designing of attractive remuneration packages for the expatriates.pay levels of employees at the headquarters.reducing unnecessary expenses.subsidiaries – subsidiaries-home country.international assignments. 1) . and foreign subsidiaries. domestic affiliates. 4) Cost-effective . 3) Provide a reasonable relationship . 2) Movement of expatriates from the home country .
The need to vary expatriate compensation.g. young children. Discrepancies in pay between parent. host and third-country nationals. etc). Remuneration issues related to re-entry into the parent-country organization. children in college. . depending on the „stage of life cycle‟ of the expatriate‟s family (e. Remuneration issues to deal adequately with new waves of change in the international business environment.
. labour relations. Expat compensation depends on internal as well as external factors -. industry type and the like constitute external factors. subsidiary role -.Internal factor include goal orientation. capacity to pay. local culture.Parent nationality. Any expatriate remuneration package should seek to equalize the cost of living at home and living abroad.
Components of Expat Compensation SALARY T A X E S Expat Compensation B E N E F I T INCENTIVES ALLOWANCES .
Currency Foundation block . Expatriates1) allowances 2) bonus and benefits.Different term Cash compensation which serves as a benchmark Domestic – 1) bonuses 2) benefits.
home or host country Which country should pay the benefits? . Regular employee – major element of remuneration Expatriate – similar or even larger portion of remuneration Benefit programme.whether home or host country Whether termination affects employee benefits entitlement? Social security benefits.
unique features: Guards again the income lost by an expatriate‟s spouse Some us firms provide the spouse with employment opportunity. 1) 2) . Spouse assistance. Expensive feature of the expatriate remuneration package. cost of living difference in payment in home country and overseas assignment Same standard of living needs to be provided. Eg.
one time lumpsum premium. 2) Cost to company are less -.different from regular payment -used for savings and spendings. Dropped.ongoing premium Adopted.keeping expatriate motivated. Incentive programe.one time payment. .on acceptance of overseas assignment -motivational value. 3 advantages of one time lumpsum premium: 1) Paid only once -. 3) Separate payment -.
MNCs generally select one of the following approaches to handle international taxation:Tax equalisation Tax protection . The final component of the expatriate‟s remuneration relates to taxes.
expatriate is paid a salary which is paid to individuals early in their careers and who are being given long term overseas assignment.) Balance.The basic objective of maintaining the home-country living standard.sheet approach . Firms generally follow a number of approaches: 1. For e.g. .) Localisation . 2. plus offer some financial inducement. Remuneration packages to fit with the specific situation. senior level managers in Japan are paid four times more than their junior staff members . In US it is much higher and in Europe it is much lower.
)Lump-sum method .giving the expatriate a predetermined pay and letting the individual decide about how to spend it.)Cafeteria approach .entails giving expatriate‟s a series of options and then letting them decide how to spend the available funds. everyone going to one region will follow one same system .MNC sets a remuneration system for all expatriates who are assigned to a particular region. 5. Thus.)Regional system . 4.3.
But MNC‟s should handle their repatriation programmes well to attract future expatriates . The activity of bringing the expatriates to the home country. which has been realized lately. Repatriation. Needs careful handling. Re-entry into the home country presents new challenges as the repatriate (returning person) copes with re-entry shock. or reverse culture shock. not the final phase in the expatriation process.
PREPARATION PHYSICAL RELOCATION REPATRIATION PROCESS TRANSITION RE-ADJUSTMENT .
It involves developing plans for the future and gathering information about the new position.g. closure of bank accounts and settling bills) or a thorough preparation of the employee and his or her family for the transfer to home. The firm may provide a checklist of items to be considered before the return to home (e. .
and disruptions experienced by the repatriate and the family. Refers to saying goodbye to colleagues and friends. and travelling to the next posting. stress. Personalized . relocation assistance reduces the amount of uncertainty. usually the home country.
settling into temporary accommodation. and opening bank account. and carrying out other administrative tasks such as renewing driving license. . where necessary. making arrangements for housing and schooling.
The most difficult step. Involves coping with reverse culture shock and career demands. . The re-entry adjustment is a tough task because of multiple factors.
the apprehension being accentuated by the uncertainty about the placement in the firm. coping with new role demands. feeling of „devaluating‟ the international experience.anxiety experienced by the expatriate when he or she returns home. .career prospects. . and a sense of isolation. probable loss of status and pay.Multiple factors. .
Key issues in International labour relations:Who should handle labour relations? What should be the Union Tactics? . The last component of IHRM is labour or employee relations.
.delegate the management of labour relations to their foreign subsidiaries. The decentralization does not keep the corporate office away from exercising some co-ordination over labourrelations strategy. and legal systems produce different labour-relations systems across countries -. The headquarters or the subsidiary plant in the concerned country? Due to national differences in economics. The corporate office becomes involved in or overseas labour agreements made by foreign subsidiaries because these agreements may affect the international plans of the firm and/or create precedents for negotiations in other countries. political.
. 2) the nationality of ownership of the subsidiary has an impact on who handles employee relations. The involvement of the MNC headquarters in host-country labour relations is influenced by several factors :- 1) the labour.relations function is centralized and is coordinated by headquarters when there is high degree of inter-subsidiary production integration.
and Organization for Economic Cooperation and Development (OECD). An MNC has the ability to move the production facilities to other locations from the place of industrial dispute. The most common union tactic is strike. the United Nations Conference on Trade and Development (UNCTAD). The second tactic used by labour unions is to form International Trade Secretariats (ITSs). The bargaining power of a union may be threatened or weakened by the financial resources of a multinational. Next tactic sought by the labour unions is lobbying for restrictive national legislations. the European Union (EU). labour unions seek intervention from the International Labour Organization (ILO). Finally. Unions use several tactics to deal with international business. .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.