International HRM

10202233
Dr. (Prof.)Sunita Jolly, DEAN
Parul Institute of Social Work

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 Learning Outcomes:
•Difference between domestic and international HRM
•Competency
– in dealing with cross cultural situations w.r.t
international recruitment and selection
•International compensation
•Issues faced by expatriates for re-entry & career anxiety
•Understanding of workforce of foreign countries
•Understanding concerns related to global market
•Issues in international IR
•Understanding of Performance Appraisal
Image source : Google

Syllabus

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 Unit-1
Background to IHRM:

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 Backdrop:
• International business is dynamic.
• Business is crossing borders as a result of Globalization
• Open markets – Competitions
• Workforce in other countries – Away from home
For example, Ford Motor Company has half its employees outside the United States,
Philips has three-fourths of its employees working outside the Netherlands and
more than half of Ericsson’s workforce is located outside Sweden.
• Complex Issues of managing business
– Finding and nurturing the suitable and capable human
resources
– high competition at both domestic and international levels
– Quality human resources are a must
– Pressure on Firms expanding manage with limited
resources
– Having right people in the right place at the right time is
key to a company’s international growth
Image source : Google

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 International HRM - Definitions
International HRM has been defined by
Morgan as the interplay among three
dimensions namely human resource activities,
types of employees, and countries of operation.
International Business must procure, motivate,
retain and effectively utilize services of people
both at the corporate office and foreign plant.
The process of procuring, allocation, effectively
utilizing human resources in an international
business is called International Human
Resource Management.
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 Dimensions of IHRM:
According to P.V. Morgan: IHRM is the interplay among 3
dimensions:
•HR Activities
•Types of employees
•Types of Countries

Dimension Model of IHRM.

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 Dimensions of IHRM:
Broad activities of IHRM :
– Procurement = HR planning
– Allocation =Hiring Employees
– Utilization = T&D, Remuneration, PM & IR.
The three country categories of IHRM
– The host country - subsidiary may be
located
– The home country - the company has its
head quarters
– Other countries sources of labour or
finance.
The 3 types of employees
– Parent Country Nationals (PCNs) ,
– Host Country Nationals (HCNs) and
– Third Country Nationals (TCNs).
For example:??? Dimension Model of IHRM.
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 Objectives
7

•Remaining competitive throughout the world

•Efficient
•Locally Responsive
•Flexible and adaptive
•Capable to transforming learning across their
globally dispersed units

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Difference Between and IHRM
According to Dowling (1999)
•Domestic HRM is involved with employees within only one national boundary; on
the other hand
•IHRM deals with 3 nationals or country categories (expatriate): PCN, HCN and TCN.
•Six factors of differentiation are :
1. A wide range of HR activities
2.  The need for a broader perspectives
3. More Involvement in employee’s personal life.
4. Responsiveness to changes in staffing requirements as international strategy
changes.
5.  Higher risk exposure
6. More external influences.

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Difference Between and IHRM

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Difference Between and IHRM

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Functions of IHRM:
IHRM department deals with heterogeneous functions and has to give additional
focus on various aspects, such as:
 
1.More involvement in the employee’s personal life.
2.Deal with different groups of employees i.e. PCN, HCN and TCN for which HR
policies and practices may differ. International HR managers have to understand
cultural differentiation in multicultural environment.
3.Manage external influences, i.e host government authorities, business and other
interest pressure and labour groups, etc.
4.Lay different emphasis on management training to deal diverse workface, their
orientation and to meet international environment
5.Provide guidance on taxation and compensation aspects.
 

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Significance of IHRM:
Scullion (2001) outlined 10 major significance of IHRM in globally business environment.
This significance can categorized in 5 key areas:

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Significance of IHRM:
CHALLENGE:
•Rapid growth of internalization and global competition has increased the nos. and
significances of MNCs – resulting in the increased mobility of human resources.

•Increasing no. of strategic alliances and cross border mergers and acquisitions has
increased the strategic implementation of IHRM as Global business.

COMMITMENT:
•Worldwide recognition of management of human resources in international
business and cross cultural management.

•Business Networks and Horizontal communication and HR plays a vital role.

COST EFFECIVENESS:
•The performance of expatriates. (poor performance of expatriate may affect the market
share and damage to foreign relations)
•Growing Importance of Expatriates in International Business.
COMPETENCE:
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Significance of IHRM:
CHALLENGE:
•Rapid growth of internalization and global competition has increased the nos. and
significances of MNCs – resulting in the increased mobility of human resources.

•Increasing no. of strategic alliances and cross border mergers and acquisitions has
increased the strategic implementation of IHRM as Global business.

COMMITMENT:
•Worldwide recognition of management of human resources in international
business and cross cultural management.

•Business Networks and Horizontal communication and HR plays a vital role.

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Significance of IHRM:
COST EFFECIVENESS:
•The performance of expatriates. (poor performance of expatriate may affect the market
share and damage to foreign relations)
•Growing Importance of Expatriates in International Business.

COMPETENCE:
•Global Strategy Implementation.
•Success or failure of international business based on effectiveness of management of
HR.
CONGRUENCE:
•Learning, knowledge acquisitions have been identified as important potential sources of
comp. advantages for MNCs.
•This has also enhanced the role of IHRM to meet the key strategic challenge of
objectives.
•Knowledge management is an important source of comp. advantage for MNCs, where
IHRM is the key partner and plays a central role.
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Major Issues in International HRM:
According to Hendry (1994), there are three main
Issues in IHRM:
 
1.The management and development of
expatriates- selection, training, compensation and
repatriation of expatriate failures.

2.The internationalization of management through

outzi (host country, parent country and other third
countries)

3. creating a new corporate culture reflecting the

need for greater international experiences across
the whole organization,
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Limitations in IHRM:
• Management is basically the principle based on local cultures,
traditions, practices and needs of the organizational growth.
It is not universal for everywhere, specially in the field of human
• resources management.
• HRM methods and systems developed by one society cannot
always be transferred and applied to another.
• HRM and industrial relations practices differ across countries as
• these have their historic origin in countries.
• Personnel management and industrial relations are embedded in
societal rules, norms, values, ideologies and no MNC can afford to
ignore the influence of local culture.

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Control Mechanisms

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Mode of Operation And HRM

• Not just subsidiary operations

• Firms may also adopt contractual modes
–Licensing
–Franchising
–Management contracts
–Projects
• And/or cooperative modes (such as joint ventures)
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Mode of Operation And HRM

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Approaches To Staffing

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Ethnocentric

• Strategic decisions are made at headquarters.

• Limited subsidiary autonomy.
• Key positions in domestic and foreign operations are
held by headquarters’ personnel.
• PCNs manage subsidiaries.

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Polycentric

• Each subsidiary is a distinct national entity with

some decision-making autonomy.

• HCNs manage subsidiaries who are seldom

promoted to HQ positions.

• PCNs rarely transferred to subsidiary positions.

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Geocentric

• A global approach - worldwide integration;

• View that each part of the organization makes
a unique contribution;
• Nationality is ignored in favor of ability:
– Best person for the job;
– Color of passport does not matter when it
comes to rewards, promotion and
development.
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Geocentric Staffing Requirement

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Regiocentric

• Reflects a regional strategy and structure.

• Regional autonomy in decision making.
• Staff move within the designated region, rather
than globally.
• Staff transfers between regions are rare.

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Transferring Staff for International Business Activities

HRM implications
- Reasons for using international assignments
- Types of international assignments
- Role of expatriates and non-expatriates
- Role of inpatriate

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The Path To Global Status

• Causes structural responses, due to:

– Strain imposed by growth and geographical spread
– Need for improved coordination and control across business units
– The constraints imposed by host-government regulations on
ownership and equity
• Evolution path common but not normative

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Stages of Internationalization

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Stages of Internationalization: Exporting

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Stages of Internationalization: Exporting

• Typically the initial stage of international operations

• Usually handled by an intermediary (foreign agent

or distributor)

• Role of HR department unclear at this stage

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Sales Subsidiary

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International Division

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International Division

• Creation of a separate division in which all

international activities are grouped
• Resembles ‘miniature replica’ of domestic
organization
• Subsidiary managers report to head of international
division
• Objectives regarding foreign activities may determine
approach to staffing of key positions
– Expatriate management role of corporate HR
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Global Product/Area Division

Global product division Global area division

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Global Product/Area Division

• Strain of sheer size may prompt structural change to

either of these global approaches

• Choice typically influenced by:

– The extent to which key decisions are to be made at the parent
country headquarters or at the subsidiary units (centralization
versus decentralization)
– Type or form of control exerted by parent over subsidiary

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Reasons for using international assignments

• Position filling
• Management development
• Organization development

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Types of International Assignments

• Short term up to 3months

• Extended up to 1year
• Long term (traditional expatriate assignment) 1 to 5 years

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The Roles of an Expatriate

• A Simple Management Network

• Agent of direct control
• Agent of socialization
• Network builder
• Boundary spanner
• Language node
• Transfer of competence and knowledge
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The Roles of Non Expatriate

• People who travel internationally yet are not

considered expatriates as they do not relocate
to another country
- Road warriors, globetrotters, frequent fliers
• Much of international business involves visits
to foreign locations, e.g.
-Sales staff attending trade fairs
-Periodic visits to foreign operations
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The Role of the Corporate HR Function

• Can we manage our people like a global product,

e.g., the feasibility of:
– The concept of a global internal labor market
– Standardization of work practices and HR activities
• What HR matters require central control and
what can be decentralized?

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Various Roles of Corporate HR
Centralized HR Decentralized HR Transition HR
Companies Companies Companies
 Large well-resourced  Small HR  Medium-sized HR
HR departments departments departments
 Key role: Managing all  Key role: Managing  Key role: Management
high-grade management elite corporate and development of senior
positions worldwide managers managers and expatriates
 Key activities:  Key activities:
 Key activities:
Planning international Influencing operating
Persuading divisional
assignments and units to support
managers to release key
performance international
staff using informal and
management globally, assignments,
subtle methods, strategic
identifying high-potential supporting
staffing.
staff decentralized HR

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 www.paruluniversity.ac.in
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