INTERNATIONAL HUMAN RESOURCE

MANAGEMENT
Presented by:
Shumaila Hafeez
Ayesha Zaheer Malik
Hadia Naeem
Syed Ali Zargham Bukhari
Laique Ur Rehman Abbasi

MS-HRM
AGENDA
 Human Resource Management (HRM)
 Why IHRM
 Theoretical Frameworks In International HRM
 Model of IHRM
 Human Resources in Developing Economies
 Difference between Comparative and International HRM (IHRM)
WHAT HAPPENS WHEN HRM GOES TO
INTERNATIONAL LEVEL????
 The International Human Resource Management(IHRM) is defined
as the interplay among three dimensions:

1. HRM Activities
2. Countries of operation
3. Type of Employees

INTERNATIO
NAL HRM-
MORGAN
MODEL
(1986)

Source: Adapted from P. V. Morgan, International Human Resource Management: Fact of

fiction, Personnel Administrator, 31,9, 1986, p. 44
DIFFERENCES BETWEEN DOMESTIC HRM AND IHRM
INDUSTRY TYPE
The industry in which a multinational firm is involved is of considerable
importance because patterns of international competition vary widely
from one industry to another. Porter (1986).
According to Porter:

Industry type

competition
Multi
Global
domestic
Industry
industry
 MULTI-DOMESTIC INDUSTRY

 Multidomestic industry, one in which competition in each country

is essentially independent of competition in other countries.

Role of HRM Function:

 More domestic in structure and Orientation (Porter Value Chain
Model 1985)
 Example: McDonalds
GLOBAL INDUSTRY
The competitive position of companies in that industry depends on
performance across all markets.
The global industry, one in which a firm's competitive position in one
country is significantly influenced by its position in other countries.

Role HRM Function:

 Deliver international support required by primary activities of
Multinational. (Porter Value Chain Model 1985)
Examples: Aircraft companies, Computer manufacturing companies.
RELIANCE OF THE MULTINATIONAL ON ITS HOME-
COUNTRY DOMESTIC MARKET

 Small market demand in their home country

 High market demand in their home country.

 United Nations Conference on Trade and Development (UNCTAD)

made an annual survey on foreign direct investment:
1. Nestle (Switzerland).
2. Thomson (Canada).
Coca cola and McDonalds are ranked 27th and 39th respectively.
ATTITUDES OF SENIOR MANAGEMENT

 Senior Management should have a strong international orientation.

 Inadequate information, a lack of international perspective frequently
results in major difficulties in international operations
(Desatnick/Bennett 1978).
CULTURE
 Culture is usually used to describe a shaping process.
 Culture shock - a phenomenon experienced by people who move
across culture
 In IHRM one has to fully appreciate the cultural differences.
CONVERGENCE APPROACH
 Etic refers to culture-common aspects of behavior.
 If researcher imposes etic approach it assumes universality across
culture.
 Etic approach or convergence hypothesis based on two key
assumptions:
1. principles of sound management that held regardless of national
environments
2. Universality of sound management practices would lead to societies
becoming more and more alike in future.
DIVERGENCE APPROACH
 Emic refers to culture-specific aspect of behavior.
 Divergence approach- the behavior of individuals within these firms
is maintaining its cultural specificity.
MANAGEMENT AND NATIONAL CULTURES
The importance of Nationality

Political

Sociological

Psychological
What Distinguishes Different
National Cultures????
DIMENSIONS OF NATIONAL CULTURE
INDIVIDUALISM VERSUS COLLECTIVISM
 Individualism

Preference for a loosely-knit social framework in which individuals

are expected to take care of only themselves and their immediate
families.
 Collectivism

Preference for a tightly-knit framework in society in which individuals

can expect their relatives or members of a particular in-group to look
after them in exchange for unquestioning loyalty.
POWER DISTANCE
 This dimension expresses the degree to which the less powerful
members of a society accept and expect that power is distributed
unequally. The fundamental issue here is how a society handles
inequalities among people.
UNCERTAINTY AVOIDANCE
 Uncertainty Avoidance dimension expresses the degree to which the
members of a society feel uncomfortable with uncertainty and
ambiguity.
 Weak Uncertainty avoidance

 Strong Uncertainty avoidance

MASCULINITY VERSUS FEMINITY
 Masculine role
 Feminine role
CULTURAL ENVIRONMENT
 Culture refers to a system of shared meaning held by the
organizations members and the distinguishes organization from other
organizations
 Managers often face challenges due to cultural differences.

 People need to learn the culture of the host country before starting the
business otherwise it creates problem for the management, creates
negative feeling among people which can lead to decreasing profits.
INSTITUTIONAL THEORY
 Institutional perspective:
Social influence and pressure to adopt appropriate HRM practices
 Institutional theory:
organizations are under pressure to adapt to and be consistent with their institutional
environment, organizations attempt to acquire legitimacy and recognition by
adopting structures and practices viewed as appropriate.
 Pillars of institutional processes:
 Regulatory
 Cognitive
 normative
ISOMORPHISM
 Three major types of isomorphism (DiMaggio and Powell , 1983) that affect the
organizations practices and structures.
1. Coercive isomorphism :
where there is a powerful constituency (government) which imposes certain
patterns on the organizations
2. Mimetic isomorphism:
where organizations in the situation of uncertainity adopt the actions exhibited by
organizations that are viewed as successful.
3. Normative isomorphism:
where professional organizations act as disseminator of appropriate organizational
pattrens which are adopted by the organizations that are under the influence of
professional organizations.
HOST COUNTRY EFFECTS
CONT….
 Host country economy
 Labor market

 Host business practices

SUBSIDIARY FACTORS
 Number of expatriates
 Knowledge exchange relationships

 Role and status of HR department

 Size of the subsidiary

 Industry characteristics
Human Resources in Developing
Economies
Human Capital

The skills, knowledge, and experience possessed by

an individual or population, viewed in terms of their
value or cost to an organization or country.
Ways Companies develop Human Resources in
developing economies
 Compete aggressively with larger employees for local talent
 Hire expats

 Parachute in talent

 Develop in-house training programs

 Substitute technology for human capital where possible

 Bring in talent for short term for specific assignments

 Recruiting senior hires for permanent positions

Identifying and screening Candidates
 Identifycandidates from personal network
 Poach workers from competitors
 Use a trial period for screening
 Use variable compensation to mitigate risk
Challenges in hiring and firing
 Unattractive career choice.
 Candidates prefer working in large companies with recognizable
brand names.
 Older, experienced managers remain conservative about career
choices.
 Employees do not understand about equity or do not see it’s value.

 Labor laws vary from country to country and can cause difficulties in
firing low performers without just cause.
Managing Employees
 Culturalnorms and labor laws
 Working hours and load of work

 Relationship between pay and productivity

What is Comparative HRM?

What is International HRM?

DIFFERENCE BETWEEN COMPARATIVE &
INTERNATIONAL HRM

 Comparative HRM is largely concerned with questions about why and

to what extent there are differences in HR practices and other macro
level factors across countries.
 IHRM is more focused on issues associated with the management of
employees across national borders in MNCs.
 IHRM has therefore been interested in questions; for example do
MNCs try to reproduce similar practices across all of their subsidiaries
or do they adjust their HR practices to host country patterns.
 Key challenges:

Research in international and comparative HRM has had to contend with three key
challenges: marginality, parochialism and ethnocentrism.

 A marginal field of inquiry

 Parochial tendencies

 An ethnocentric bias