International Context of HRM

Introduction to IHRM, concept & Issues in IHRM, Barriers to effective IHRM, Variables
between Domestic and International HRM, Strategic view of IHRM, Hofstadter’s cross-cultural
management study, Approaches, Cross national differences in personnel and organizations-
Complexities and issues in managing human resource across countries; IHRM department and
functions; Models of IHRM..

Notes: ppt 1

What is IHRM?:
What is IHRM? International HRM (IHRM) is the process of: Procuring, Allocating, and Effectively utilizing human
resources in a multinational corporation, While balancing the integration and differentiation of HR activities in
foreign locations .

Factors that Influence the Global Work Environment:

Factors that Influence the Global Work Environment

Forces for Change:

Forces for Change Global competition Growth in mergers, acquisitions and alliances Organization restructuring
Advances in technology and telecommunication

Impacts on Multinational Management:

Impacts on Multinational Management Need for flexibility Local responsiveness Knowledge sharing Transfer of
competence

Managerial Responses:
Managerial Responses Developing a global “mindset” More weighting on informal control mechanisms Fostering
horizontal communication Using cross-border and virtual teams Using international assignments

IHRM V/S DOMESTIC HRM:

IHRM V/S DOMESTIC HRM Encompasses more functions, More heterogeneous functions, Involves constantly
changing perspectives, Requires more involvement in employees’ personal lives, Influenced by more external
sources Involves a greater level of risk than typical domestic HRM.

TRENDS:
TRENDS Integration of the world’s economies and business globalization continues unabated International trade
is growing more rapidly than world output Foreign direct investment (FDI) flows are increasing The number of
cross-border, inter-firm agreements has risen dramatically Social, economic, and political developments
throughout the world changed the way global business is conducted

contd.:
contd. The external environment greatly influences HRM activities Each country has its own: Laws Business
customs Workforce characteristics Political climate The most difficult challenge to overcome is the “people
challenge ”

Issues in IHRM:
Issues in IHRM Managing international assignments Employee and family adjustment Selecting the right person
for a foreign assignment Culture, communication and gauge Language and communication

Other International Issues to be addressed by HR:

Other International Issues to be addressed by HR Clarifying taxation issues Coordinating foreign currencies,
exchange rates Compensation plans Working directly with the families of employees More involvement in
employees personal life, facility etc. Different HR systems for different geographic locations More complex
external constituencies, foreign Governments, political and religious groups Heightened exposure to risks such
as health, terrorism, legal issues, human and financial consequences of mistakes

Barriers to effective global HRM:

Barriers to effective global HRM Variations Perception of HR Attitude and actions of headquarters towards HR
Resistance to change Cultural differences in learning and teaching styles

Main challenges in IHRM:

Main challenges in IHRM High failure rates of expatriation and repatriation Deployment – getting the right mix of
skills in the organization regardless of geographical location Knowledge and innovation dissemination –
managing critical knowledge and speed of information flow Talent identification and development – identify
capable people who are able to function effectively Barriers to women in IHRM International ethics Language
(e.g. spoken, written, body)

contd.:
contd. Different labor laws Different political climate Different stage(s) of technological advancement Different
values and attitudes e.g. time, achievement, risk taking Roles of religion e.g. sacred objects, prayer, taboos,
holidays, etc Educational level attained Social organizations e.g. social institutions, authority structures, interest
groups, status systems

The Cultural Nature of Global HRM:

The Cultural Nature of Global HRM Cultural differences between nations can influence the effectiveness of HRM
policies and practices HRM must be congruent with the cultural orientation of the workers Hefstede says cultures
vary in five dimensions: Individualism versus collectivism Power distance Avoidance of uncertainty Masculinity
Long-term versus short-term orientation

The Concept of “Fit” in Global HRM:

The Concept of “Fit” in Global HRM “ Fit ” is the degree to which HRM policies are congruent with the: Strategic
plan of the organization Work-related values of the foreign culture Internal fit : making sure HRM policies facilitate
the: work values and motivation of employees External fit: the degree to which HRM matches the: context in
which the organization is operating

PowerPoint Presentation:
Discrepancies in International compensation : The “discrepancies” most cited are listed in the order of how often
they were mentioned as being major problems: • Base Salary • Overseas Premiums • Housing Allowances •
Education Allowances • Cost of Living Allowances • Tax Equalization • Repatriation Allowances • Performance
Based Incentive

PowerPoint Presentation:
The biggest HR challenge facing any globally oriented corporation is finding competent managers An expatriate
manager (PCN) comes from the corporation’s home nation Relocation can be troublesome, regardless of the
managers country of origin The challenge is to capitalize on the diversity of a global workforce without
suppressing cultural heritage

The Expatriate Manager in the MNC:

The Expatriate Manager in the MNC Managing the expatriate’s adjustment process is a primary focus of GHRM
The difficulty of this task has increased because sales and production shifted closer to markets There is higher
use of host country and third country management There is a concurrent increase in the number of “inpats” Both
inpats and expats can have a difficult time adapting to their new surroundings

Selecting the Expatriate Manager:

Selecting the Expatriate Manager Factors associated with expatriate success: Good technical and language skills
Strong desire to work overseas Specific knowledge of overseas culture Well-adjusted family situation Complete
support of spouse Behavioral flexibility Adaptability and open-mindedness Good relational ability Good stress
management skills

Legal and Ethical Climate of GHRM:

Legal and Ethical Climate of GHRM International business is conducted in a maze of: International trade
agreements Parent country laws Host country regulations Ethical behavior challenges may also be encountered :
Environmental regulation, may be weaker “Gift giving” or “greasing” may be common practice

contd.:
contd. Regulations regarding employment discrimination vary from country to country Ethical dilemmas between
profits and the preservation of basic human rights may also exist Resolving ethical issues is not an easy task

Labor Relations & the International Corp.:

Labor Relations & the International Corp. Labor relations issues that may arise in the international environment:
Unions Labor laws Less emphasis on written contracts How much participation employees are entitled to in HRM
policies

contd.:
contd. Employee participation is guaranteed in Germany South Korea’s giant industrial firms, the chaebol, control
every aspect of worker’s lives Government business regulations may differ In Singapore, annual wage
adjustments are set by a national council and strikes are nearly impossible There is no simple solution to the
labor relations problems with which MNCs and GCs are confronted Labor has been trying to establish global
labor organizations