By: Bhawna

• International human resource management (IHRM) is the process of procuring, allocating, and effectively utilising human resources in a multinational corporation.

• Even when dealing with one particular HR function area such as compensation, the international HR manager is faced with a great variety of national and international pay issues.

• For example, while dealing with pay issues, the HQbased HR manager must coordinate pay systems in different countries with different currencies that may change in relative value to one another over time. An American expatriate in Tokyo who receives a salary of $100,000 may suddenly find the buying power of that salary dramatically diminished if the Japanese yen strengthens in value relative to the US dollar. A US dollar purchased 248 yen in 1985, but less than 110 yen in 2000.

• Parent-country national – employee who was born and works in the country in which an organization’s headquarters is located. • Host-country national – employee who is a citizen of the country (other than parent country) in which an organization operates a facility. • Third-country national – employee who is a citizen of a country that is neither the parent country nor the host country of the employer.

• When organizations operate overseas, they hire a combination of parent-country nationals, host-country nationals, or thirdcountry nationals.

• Expatriates – employees assigned to work in another country.

• International organization – an organization that sets up one or a few facilities in one or a few foreign countries. • Multinational company – an organization that builds facilities in a number of different countries in an effort to minimize production and distribution costs. • Global organization – an organization that chooses to locate a facility based on the ability to effectively, efficiently, and flexibly produce a product or service using cultural differences as an advantage.

Levels of Global Participation

Three Approaches to staffing decision: • Ethnocentric: All key positions are filled by parentcountry nationals.

• Polycentric: HCNs are recruited to manage subsidiaries in their own country and PCNs occupy positions at corporate headquarters. • Geocentric: utilizing the best people for the key jobs throughout the organization, regardless of nationality.

Staffing practices Training practices Performance Appraisal Compensation and benefits

Staffing Practices
• Resumes seek strong educational background • E-recruitment: was the first eportal established in 1998 • Elaborate employment tests related to the job, especially at entry level. • Newspaper advertisements are used to brand the company to potential applicants. • Personal questions are asked in interviews

Training Practices
• Education is extremely valued, and training is an extension of it. • Entry point training programs (3 to12 months of orientation). • Ongoing training programs. • Development programs (promotions involve training). • In-house training centers are a common feature in Indian organizations. • Deductive learning style in training: Known as “topdown approach” where learning principles start with general concepts and move toward specific application.

Performance Appraisal
• Cultural dimensions of collectivism and power distance make objective appraisals a challenge.
 Supervisors and subordinates develop close relationships.  Organizational loyalty is as important as work performance.  Employee promotions are frequently based on seniority.

• Annual performance appraisals. • Supervisors provide performance ratings that are frequently inflated due to personal relationships. • Employment at will does not exist in India. Employment termination carries a social stigma.

Compensation and Benefits
• In addition to a base salary, compensation includes: – House rent allowance (HRA*). – Medical allowance. – Dearness allowance (DA*). – Leave travel allowance (LTA*). – Commuter allowance. – * These allowances are frequently referred by their acronyms • Several categories of leave (vacation) exist: – Sick leave: 7 days (medical certificate required). – Casual leave: 7 days (for personal and family emergencies, requires prior permission of boss). Employees can take maximum 2 days at a time – Annual leave: 3 weeks (after one year of employment). – Federal holidays: About 20 days.

Retirement age:

55-60 years (private sector);.
60 years (public sector). Retirement Benefits: Employees receive two lump-sum payments when they retire: Provident Fund (similar to 401(k)) •Typical contributions: 10-12 percent of base salary (employer and employee). •Payable on retirement, voluntary separation, death.

Gratuity •Only employer contributes (15 days salary per year of service). •Tax-exempt for employees. •Payable on retirement, voluntary separation, death.

Understanding the Japanese way of people management
There are 4 pillars to japanese HR management : 1. Long term employment:  55% of Japanese companies are still observing long term employment  14%actively use it as a tool ofrecruiting and retention  Cohort recruiting from colg and stay with the company until retirement  Basic idea: Age/tenure=experience=contribution

2.Seniority based promotion and composition
 Pay for age concept  automatic pay increase  more work less pay when young;less work more pay with age 3.Company driven employee training programme

4.Trade/labor unionism  Unionization rate=18.2% with 10.04million membersas of 2006  Types of labor union: -enterprise level(905 majority)-indutrial trade union Enterprise or inhouse unions o 10 or more employees o Employees at companies with no inhouse unions can join trade unions o Strikes are rarely done due to cooperative relationships of unions and mgt.

Major HR practices in China Major HR practices in China
• • • • • Recruitment techniques Selection techniques Training Work culture Expatriate management

• Companies in china recruit candidates mainly on basis of: • Skills

• Employment history
• Total work experience • Language abilities • Career goals

Recruitment techniques
Advertisement s

• Advertisements are not permitted in the news media without “the prior approval of the local labour and social security department”. • Advertisements are usually placed in local papers or specialised industry publications.

Job fairs

• The common recruitment avenues are the labour market, personnel exchange seminars • The job fairs are sponsored by the Labour Bureau.
• To recruit potential applicants, many companies regularly go to college or university campuses to interview students • They can negotiate the job terms directly with the students • The development of technology parks and technology development zones in China, there has been a concomitant growth in the use of Western HR strategies among multinational companies. • International Communications and PR companies are developing offices throughout China to assist local and overseas businesses work together effectively to meet the demands of Eastern and Western markets.

Campus Placements

Global Image

Corporate Co-ordination

Selection Techniques
• The interview is a common selection tool for many companies and is the dominant method used. Punctuality is very important in China and in greeting the applicant the Interview employer will not look at them directly because lowering of eyes shows respect. • Technology tests, technical tests, problem solving tests and English proficiency tests. • Traditional companies rarely use psychological or aptitude testing, psychometric testing of abilities and attitudes, interests and motivations, needs and aspirations and/or personal management style has been adopted from Western HR practices, especially in the Healthcare industry.


Behavioural Event

• Interactive role play, simulation exercises and leaderless group discussion (LGD).

• Some of the major training methods are: • Technical training(both expatriates & Local employees) • Language training( expatriates) • Pre – departure training(expatriates) • Training on work culture( expatriates)

Respect for age & hierarchy Face & harmony

Features of Chinese work culture

Group orientation

Personal relations or guianxi

• the % of expatriate from western, expatriate from Hong Kong and expatriate from Taiwan is decreasing, but % of expatriate from Asia Pacific and locally hired foreigner is increasing.
Locally Hired Foreigner •Medical Benefit • Insurance • Housing Benefit • Car Benefit •5. Home Visit Assistance

Locally Hired Returnee •Medical Benefit • Insurance • Housing Benefit • Car Benefit • Retirement Benefit

Expat allowance

Expat from Western Countries •Housing Benefit • Insurance • Medical Benefit •Home Visit Assistance • Car Benefit

Expat from Asia Pacific •Medical Benefit • Insurance • Housing Benefit •Home Visit Assistance • Children Education •Benefit

Expat from Hong Kong •Medical Benefit • Home Visit Assistance •Moving/Relocation •Assistance • Insurance •Housing Benefit

Expat from Taiwan •Home Visit Assistance • Moving/Relocation •Assistance • Medical Benefit •Insurance •Housing Benefit

A Comparison between

HR practices of different countries

Country USA Korea Sri Lanka Denmark Germany Greece Japan

Average Hours Worked Per Week 38 47 43 32 33 36 36

Vacationing Around the World

Germany Brazil Britain Canada South Korea Japan U.S.
0 5 10 15 20 Days 25 30 35 40 45

Average annual vacation days

Training systems used in different countries
Type Cooperative Example Countries Features and Sources of Institutional Pressures Austria, Germany, Legal and historical precedents for cooperation Switzerland, and some Latin among companies, unions, and the government. American Countries USA and the UK Lack of institutional pressures to provide training. Companies provide training based on own cost-benefits. Low labor turnover encourages investment in training without institutional pressure

Company-Based Voluntarism/high labor mobility

Voluntarism/low Japan labor mobility State-Driven Incentive Provider Hong Kong, Korea, Singapore, Taiwan, China Supplier

Government identifies needs for skills and uses incentives to encourage companies to train in chosen areas. Developing countries in Asia No institutional pressures for companies to and Africa, transition train. Government provides formal training economies organizations.

Japanese vs. U.S. Leadership Styles
Dimension Employment Evaluation Career Paths Dec. Making Control Mech. Japan Often for life Slow, takes many years Very general; based on rotations Group based Implicit & informal; reliance on trust and goodwill US Often short-term Fast: those not promoted often leave v. specialised; people stay in one area By individual managers Explicit; based on knowing the control mechanisms

Concern for employees

Shared collectively
Broad and covers the whole life

Assigned individually
limited to work-life

Reason for Expatriate Failure
 US Firms
Inability of spouse to adjust Manager’s inability to adjust Other family problems Manager’s personal or emotional immaturity Inability to cope with larger overseas responsibilities

 Japanese Firms

  

Inability to cope with larger overseas responsibilities Difficulties with the new environment Personal or emotional problems Lack of technical competence Inability of spouse to adjust

European Multinationals: Inability of spouse to adjust.

Most challenging International HR task Managing The Global Virtual Teams

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