School of Labor and Industrial Relations

The University of the Philippines - Diliman

IR 222 HRD at the Firm Level

Submitted by: Grace Ysabelle S. Pascual

Submitted to: Prof. Virgel Binghay

Report Outline

TITLE: HR Trends & International HRM

Comparing IHRM Approaches

Defining IHRM :

• International human resource management is the process of employing, training and

developing and compensating the employees in international and global organizations.

(Bhagyashree, n.d.)

Employees in an International Workforce (Noe et al., 2020):

Employers in the Global Marketplace

Domestic: No other countries involved in the company process. (Noe et al., 2020)

International: An organization that sets up one or a few facilities in one or a few foreign

countries. (Noe et al., 2020)

Multinational: An organization that builds facilities in a number of different countries in an

effort to minimize production and distribution costs. (Noe et al., 2020)

Global: 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.

(Noe et al., 2020)

Transnational HRM System: type of HRM system that makes decisions from a global

perspective, includes managers from many countries, and is based on ideas contributed by people

representing a variety of cultures. (Noe et al., 2020)

Factors Affecting HRM in International Markets

• Whatever the level of global participation, organizations that operate in more than one

country must recognize that the countries are not identical and differ in terms of many

factors. (Noe et al., 2020)

1. Culture – community’s set of shared assumptions about how the world works

and what ideals are worth striving for. (Noe et al., 2020)

Five Dimensions of Culture from Geert Hofstede

- Individualism/Collectivism - the strength of relation between an individual

and other individuals in the society. (eg. United states and Great Britain as

individualist vs. Asian countries who thinks they are part of the community)

(Noe et al., 2020)

- Power Distance – concerns the way the culture deals with unequal

distribution of power and defines the amount of inequality that is normal.

Eg. Philippines and India accepts power differences rather than Israel who

doesn’t support inequality in an organization. (Noe et al., 2020)

- Uncertainty Avoidance – how cultures handle the fact that the future is

unpredictable. (eg. Greece and Portugal relies on culture, law and technology

compared to Singapore and Jamaica where people seem to take each day as it

comes) (Noe et al., 2020)

- Musculinity/Femininity – is the emphasis a culture places on practices or

qulaties that have traditionally been considered masculine or feminine.

(Musculine culture – money, achievement, assertiveness and competitions vs

feminine – relationships, service, care for the weak and preserving

 environment) Musculine - Germany and Japan vs Feminine : Norway and

Sweden (Noe et al., 2020)

- Long-term/Short Term Orientation – suggests whether the focus of

cultural values is on the future(long term) or the past and present (short term).

(eg. Asian countries values saving and persistence while US and Russia

promote social obligations in the present) (Noe et al., 2020)

2. Education – countries also differ in the degree to which their labor markets

include people with education and skills of value to employers. For example:

countries with high education but low wage expectancy. (Noe et al., 2020)

3. Economic Systems – countries economic systems also play an important

factor for example tax, compensation system, price control and other

activities. (Noe et al., 2020)

4. Political-legal systems – government’s, laws, and regulations- strongly

impinges on human resource management. (Noe et al., 2020)

MNCs Approach to International Human Resource Management

1. Ethnocentric Approach:

Here the MNC simply transfers HR practices and policies used in the home country to

subsidiaries in foreign locations. Expatriates from the MNCs home country manage the foreign

subsidiaries and the MNCs headquarters maintain tight control over the subsidiaries policies.

(Bhagyashree, n.d.)

2. Polycentric Approach:
In this case, the subsidiaries are basically independent from headquarters. HR policies are

developed to meet the circumstances in each foreign location. Local managers in the foreign sites

are hired to manage HRM activities. (Bhagyashree, n.d.)

3. Region-Centric Approach:

This approach represents a regional grouping of subsidiaries. HR policies are coordinated within

the region to as much an extent as possible. Subsidiaries may be staffed by manager from any of

the countries within the region. Coordination and communication within the region are high, but

quite limited between the region and the MNCs headquarters. (Bhagyashree, n.d.)

4. Geocentric Approach:

In this case, HR policies are developed to meet the goals of the global network of home country

locations and foreign subsidiaries. This may include policies which are applied across all

subsidiaries, as well as policies adapted to the needs of individual locations depending on what is

best to maximize global results. (Bhagyashree, n.d.)

The firm is viewed as a single international business entity rather than a collection of individual

home country and foreign business units. HRM and other activities throughout the MNC are

managed by individuals who are most appropriate for the job regardless of their nationally. Thus,

one may find a British manager handling HRM activities in the New York office of a Dutch

MNC. (Bhagyashree, n.d.)

Challenges and Emerging Issues in International Human Resource Management

 1. Ethics and corporate social responsibilities - MNCs have been accused of being

indifferent to the problems of host countries as they are more concerned about the

profitability of their companies. MNCs have to balance the ethics and moral of their

country and host country. (Bhagyashree, n.d.)

2. Bribery - MNCs from developed countries have been accused of bribing Government

officials. Hence, countries should frame laws to prevent corruption. (Bhagyashree, n.d.)

3. Code of conduct for MNCs - “to further the twin value of living and working together

and human dignity by promoting free trade, environmental and cultural integrity and prevention

of bribery and corruption.” (Bhagyashree, n.d.)

References:

• Bhagyashree, S. (n.d.). What is International Human Resource Management? Economics

Discussion. https://www.economicsdiscussion.net/human-resource-management/what-is-

international-human-resource-management/31956

• Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2020). Fundamentals of Human

Resource Management (8th ed.). Mc Graw Hill Education.