Importance of IHRM

Reasons for growing importance of International Human Resource

Management (IHRM)
In order to explore the field of IHRM, it is important to understand
why there is gradual increase of interest in International Human
Resource Management. IHRM is of great importance at present for
a number of reasons:

Recent years have witnessed the rapid growth of globalization and

international competition. The multinational corporations (MNCs)
have increased in number and significance, which contributing to
the growing importance of the international role of human
resource management.
It has been increasingly recognized that the effectiveness of human
resource management is one of the major factors to determine the
success or failure of international business. There is also
recognition that the quality of management in international
operations seems to be more critical than in domestic operations.
A growing shortage of managers with international exposure and
experience is becoming an increasing deficiency which affects a
company’s corporate efforts to expand abroad. Meanwhile, the
emerging markets require managers with distinctive competence
and context-specific knowledge of how to do business successfully
in countries which are both culturally and economically distantly.
Thus, a larger role for IHRM activities in multinational
corporations is assigned.
The failure in international business arena is often costly both in
human and financial terms, and is proved to be more severe than
that in domestic business. Companies need to take precautionary
measures to train and compensate human resources. This makes a
full-fledged IHRM necessary.
HR strategy plays a significant role in the control and
implementation in MNCs. It is not difficult to determine which
strategy to pursue for a MNC in an internationalizing environment.
What challenges is how to implement these strategies to be
successful. Developing unique organizational cultures is of far
more importance than structural innovations in any global or
transnational strategy. To this extent, IHRM strategy becomes the
crucial determinant of the implementation and success of the MNC
strategy.
The complex nature of HRM problems involving in global
environment is underestimated by some companies. Poor
management of human resource often results in business failures
in international business. Expatriate performance failure or
underperformance continues to be problematic for IHRM in many
international corporations.