IHRM

Definition
 Morgan defines international HRM as the
interplay among three dimensions-human
resource activities, type of employees, and
countries of operation.
 Importance of International
Human Resource Management
• Globalization is gaining momentum
• Markets are no longer protected from foreign
competition
• A large proportion of workforce is located in
other countries away from their homes and
home countries
• Quality human resources are a must for
implementing global competitive strategies
 Major differences between
domestic HRM and IHRM
 1.Business activities
 e.g. taxation, international relocation, expatriate
remuneration, performance appraisals, cross-
cultural training and repatriation
 2.Increased complexities
e.g. currency fluctuations, foreign HR policies
and practices, different labor laws
 3.Increased involvement in employee’s
personal life
 e.g. personal taxation, voter registration,
housing, children’s education, health, recreation
and spouse employment
A Model of IHRM
 Type of countries involved
• The three national or country
categories involved in international HRM
activities:
– the Host country where a subsidiary may
be located
– The Home country where the firm is
headquartered
– “Other "countries that may be the source of labor
or finance.
 Type of Employees
• The three types of employees of an
international firm:
• Host-country nationals (HCNs),

• Parent-country nationals (PCNs)

• Third country nationals (TCNs).

• Eg: IBM employs Australian citizens (HCNs) in its

Australian operations, often sends U.S. citizens
(PCNs) to Asia-Pacific countries on assignment, and
may send some of its Singaporean employees on
assignment to its Japanese operations (as TCNs).
International Assignments Creates
Expatriates and Inpatriate
An expatriate is an employee who is working and
temporarily residing in a foreign country.
• Inpatriate refers to the transfer of subsidiary staff
into the headquarters(Parent country operations)
 HR Activities
• The three broad human resource
activities: procurement, allocation, and
utilization.
• Human Resource Planning
• Staffing(Recruitment & Selection)
• Training and Development
• Performance Management
• Compensation and Benefits
• Labour Relations ( Industrial Relations)
 Difference between Domestic
HRM and IHRM
• Need for Broader Perspective
• Need to design and administer programmes focuses on
more than one country
• Eg: co-ordinate pay systems in different countries while
taking in to consideration of different currencies and
the exchange rates
• Handling fringe benefits (concept of family in employee
health insurance schemes)
• Concept of promotion, overtime etc.
 More HR Activities
• International environment requires the HR
department to undertake more HR activities than
those in domestic HR.
• They are :
• international taxation

• international relocation and orientation

• administrative services for expatriates

• host government relations

• language translation services

Each function of HR has a new
dimensions in IHRM
Human Resource Planning
 Difficulty in implementing HR procedure in

host countries
 Providing developmental opportunities for

international managers
 Each function of HR has a new
dimensions in IHRM
• Employee hiring
• Ability to mix with the organisation’s culture
• Ethnocentric, Polycentric and geocentric approach to
staffing
• Selection of expatriates
• Coping with expatriate failure
• Managing repatriation process
 Each function of HR has a new
dimensions in IHRM
• Training and development
• Emphasis on Cultural training
• Language Training
• Training in manners and mannerisms
 Each function of HR has a new
dimensions in IHRM
• Compensation
• Devising an appropriate strategy to compensate
expatriates
• Minimizing discrepancies in pay between parent, host
ad third county nationals
• Issues related to re-entry of expatriates in to the home
country
 Each function of HR has a new
dimensions in IHRM
• Performance management
• Constraints while operating in host countries need to
be considered
• Physical distance, time differences add to complexity

• identification of raters to evaluate subsidiary

 performance
 Each function of HR has a new
dimensions in IHRM
• Industrial relations
• Who should handle industrial relations problem in a
subsidiary?
• What should be the attitude of the parent company
towards unions in a subsidiary?
• What should be the union tactics in subsidiaries?
 Difference between Domestic
HRM and IHRM
• Need for Broader Perspective
• Need to design and administer programmes focuses on
more than one country
• Eg: co-ordinate pay systems in different countries while
taking in to consideration of different currencies and
the exchange rates
• Handling fringe benefits (concept of family in employee
health insurance schemes)
• Concept of promotion, overtime etc.
 Difference between Domestic
HRM and IHRM
• More involvement in Employee’s Personal
Lives
• Greater degree of involvement in the personal lives of
PCN’s and TCN’s
• MNE’s maintain an “International Human Resource
Service” section to coordinate the administration of
PCN’s and TCN’s ( banking, Housing arrangements,
health care, all aspects of remuneration, child care,
home rental while on assignments, co-ordinating the
home visits, final repatriation)
 Difference between Domestic
HRM and IHRM
• Changes on Emphasis
• Emphasis on various HR activities will change as the
International business matures.
• Eg: Need for the PCN’s and TCN’s declines and more
HCN’s in the workforce.
• Resources previously allocated for the expatriate
compensation and benefits to activities such as training
and development
 Difference between Domestic
HRM and IHRM
• Risk Exposure
• Risk Exposure is high in IHRM
• (Kidnapping , Terrorism, Racism)
• Need for Emergency evacuation procedures
• Seizure of MNC’s Assets in a foreign Country
 Example from Japanese MNCs
Campbell, N. (1991). How Japanese multinationals work so well.
Prism, 4, 61-69.
1. Borderless structure and bottom-up decision-making processes
that encourage communication and information flow among all
components of the company and extend the network to its key suppliers,
distributors, and other business partners.

2. Custodial leadership that emphasizes values and vision and is skilfully

unassertive, while energizing and challenging middle managers with
demanding targets.

3. Human resource management, including socialization, training, and

promotion via a hierarchy of ranks, job rotation, and appraisal systems
that promote hard work, commitment, and competition among peers.

4. Incremental planning and control that help a company expand little

by little, focusing on new products and the relentless pursuit of
operating improvements, rather than "grand designs" for competitive
advantage.

5. An extended family model that encourages and rewards commitment.

 IHRM - a shift in thinking
Laurent (1986)

 Explicit recognition by parent org of the

existence of assumptions and values of
home & host cultures
 Explicit recognition by parent org –
ethnocentrism is neither good/bad, has
strengths and weaknesses
 Explicit recognition of subsidiaries’
preferences – which may be different
 IHRM - a shift in thinking
Laurent (1986)

 Willingness to acknowledge cultural

difference – discuss and learn
 Genuine belief in creative and effective
ways of managing people through cross-
cultural training/learning
 Important lessons for global firms
 The need to manage change
 The need to respect local cultures
 The need to understand a corporation’s
culture
 The need to be flexible
 The need to learn
 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)
 Main challenges in IHRM
 Different labor laws
 Different political climate
 Different stages) 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
 Strategies for managing a global
workforce
(1) Implement the aspatial career strategy
 Get people from everywhere (geocentric approach)
 Expats work in multiple countries during the course of
their career
 Gain a lot of knowledge about different cultures &
operations
 Develops in-depth knowledge
 Use previous knowledge for new assignment
 Extremely high cost
 Mainly managers, not technicians
 Strategies for managing a global
workforce
(2) Implement the awareness-building assignment
strategy
 Expose a candidate to cultural training exercises
 Usually for short term (3 months to one year)
 Family members usually not required to relocate
 Usually used to train candidates for future
assignments
 Learn from foreign assignment and bring experience
back to HQ
 Strategies for managing a global
workforce
(3) Implement the SWAT team strategy
 Highly mobile teams for short term
assignments
 Deployed throughout the organization to
different parts of the world
 No development agenda, plain
troubleshooting
 Transfer technical knowledge to locals as they
fix problems
 E.g. technical troubleshooters
 Strategies for managing a global
workforce
(4) Implement the virtual solutions strategy
 Collection of practices that exploit electronic
communication
 E.g. internet, intranet, videoconferencing,
electronic databases, email, electronic expert
systems
 Low cost and very fast in terms of
disseminating knowledge
 Used by Xerox and Ford
 Key learning themes
 Understand the main differences
between domestic HRM and
international HRM
 Able to demystify globalization
 Understand strategies adopted by
international, multinational, global
and transnational organizations
 Important lessons to be learnt by
global firms
 Understand the
difficulties/challenges in IHRM
 Strategies for managing a global
workforce