Introduction

 GHRM
 Course Advisor- Dr Debjani Ghosh
 Global HRM DEFINED
Global human resource management is the process of managing people across international
boundaries by multinational companies. It involves the worldwide management of people, not just
the management of expatriates.

The main contrast between national and global HR practice is the need to see the
bigger picture: ‘The difference is the higher complexity and the need for sensitivity to different
cultures and different business environments.’ Understanding the local context is key and an
international HR person needs to be asking questions such as:
What is the business environment here?
What is the role of the trade unions?
What is the local labour law?
Are these people different?
Are their motivation patterns different?
 The complexities of operating in different countries and employing
different national categories of workers is a key variable that
differentiates domestic and international HRM, rather than any
major differences between the HRM activities perform.
 https://www.youtube.com/watch?
v=2xJ_hbD4TQA&ab_channel=LisaMarie
 the complexity of international HR can be attributed to six factors:
 More HR activities.
 The need for a broader perspective
 More involvement in employees’ personal lives.
 Changes in emphasis as the workforce mix of expatriates and locals
varies.
 Risk exposure
 Broader external influences
• More HR activities
• International Taxation -The administration of tax equalization
policies is complicated by the wide variations in tax laws across
host countries and by the possible time lag between the completion
of an expatriate assignment and the settlement of domestic and
international tax liabilities.

• International Relocation And Orientation

• Administrative Services For Expatriates
• Host-government Relations
• Language Translation Services.
International relocation and orientation
involves the following activities:
 Arranging For Pre-departure Training
 Providing Immigration And Travel Details
 Providing Housing, Shopping, Medical Care, Recreation And
Schooling Information
 Finalizing Compensation Details Such As Delivery Of Salary
Overseas, Determination Of Various Overseas Allowances And
Taxation Treatment.
The need for a broader perspective
 HR managers working in an international environment face the
problem of designing and administering programs for more than
one national group of employees (e.g. PCN, HCN and TCN
employees who may work together in Zurich at the European
regional headquarters of a US-based multinational).

 A broader, more international perspective on expatriate benefits

would endorse the view that all expatriate employees, regardless of
nationality should receive a foreign service or expatriate premium
when working in a foreign location.
 Business expatriates are expensive people:

 They usually receive their home salary plus an incentive for

working abroad and maybe, if they are going to a higher-cost
country, an adjustment (known as a cost of living allowance or
COLA) to ensure that their standard of living remains at least equal
to their home standards.
 In addition, there are transport costs, accommodation costs,
maybe a financial allowance to compensate for their partner
having to give up their job, school fees for their children (as local
schooling is often not an option), insurance, chambers of
commerce memberships, and health service guarantees.
 According to wall street journal , the first year expense is three
times U.S. executives base salary
 On top of that are the costs of running a global HRM service to
manage these people from afar. There may be tax or other fiscal
complications in the home and host country resulting in further
allowances being necessary. In sum, they can be costly people to
employ.
 Consequently, business expatriates usually perform critical
technical functions or important managerial roles. Organizations
use them because they have skills otherwise lacking in that location
 To enhance co-ordination and control across national borders
 Expatriation is a superb career development experience. The
continuing growth in the world-wide numbers of expatriates shows
that companies at least believe that they bring advantages to global
communication across their organization even in these times of
enhanced transport and communication links.
More involvement in employees’ personal lives.

 A greater degree of involvement in employees’ personal lives is

necessary for the selection, training and effective management of
both PCN and TCN employees.
 Many MNEs have an ‘International HR Services’ section that
coordinates administration of the above programs and provides
services for PCNs and TCNs, such as handling their banking,
investments, home rental while on assignment, coordinating home
visits and final repatriation.
Changes in emphasis as the workforce mix of
expatriates and locals varies.
 As foreign operations mature, the emphasis put on various human
resource activities change. For example, as the need for PCNs and
TCNs declines and more trained locals become available,
resources previously allocated to areas such as expatriate
taxation, relocation and orientation are transferred to activities
such as local staff selection, training and management
development.
Risk exposure

 expatriate failure (the premature return of an expatriate from an

international assignment) and under-performance while on
international assignment is a potentially high-cost problem for
MNEs. The direct costs of failure (salary, training costs, travel
costs and relocation expenses) to the parent firm may be as high as
three times the domestic salary plus relocation expenses, depending
on currency exchange rates and location of assignments.
 Another aspect of risk exposure that is relevant to IHRM is
terrorism
 These include events in oil-rich Nigeria where high-profile
companies such as Royal Dutch Shell, Italy’s Agip and France’s
Total have been targeted by militant groups. Specifically, Royal
Dutch Shell was targeted when a car bomb was placed in one of
their compounds and one of Total’s oil facilities was stormed by
armed militants, resulting in the death of three police officers. These
events have resulted in Shell evacuating the some 400 dependants of
expatriate employees stationed in Nigeria. Not only do such events
have an impact on the immediate work experience of expatriate
employees but they may also make the recruitment of future
expatriate employees for roles in these countries more difficult.
 The HR department may also need to devise emergency evacuation
procedures for highly volatile assignment locations subject to
political or terrorist violence, or major epidemic or pandemic crises
such as severe acute respiratory syndrome (SARS) and Covid-19.

 In 2019, Ernst & Young surveyed 500 board members and

chief executive officers (CEOs) globally and found that only
20% of the executives surveyed believed their companies were
prepared to respond to a large adverse risk
 their current “grounding” may mean they are experiencing a
sense of loss. Their frequent travel, hotel accommodation, and
business dinners have been replaced by stay-at-home
restrictions and virtual meetings. The stress caused by the
demands of virtual global work is real; many employees are
experiencing long work hours to accommodate time zones and
performance challenges in less than ideal remote working
conditions. 
Broader external influences

 The major external factors that influence IHRM are the

type of government,
the state of the economy and
generally accepted practices of doing business in each of the various
host countries in which MNEs operate.
 In developed countries, labor is more expensive and better
organized than in less-developed countries and governments require
compliance with guidelines on issues such as labor relations,
taxation and health and safety. These factors shape the activities of
the subsidiary HR manager to a considerable extent.

 In less-developed countries, labor tends to be cheaper, less

organized and government regulation is less pervasive, so these
factors take less time. The subsidiary HR manager must spend more
time, however, learning and interpreting the local ways of doing
business and the general code of conduct regarding activities such
as gift giving and employment of family members
which activities change when HRM goes international ?
1. The three broad human resource activities of procurement, allocation, and utilization.
(These three broad activities can be easily expanded into the six HR activities listed below).
-Human resource planning.
-Staffing (recruitment, selection, placement).
-Performance management.
-Training and development.
-Compensation (remuneration) and benefits.
-Industrial relations.

2. The three national or country categories involved in international HRM activities:

(1) the host-country where a subsidiary may be located,
(2) the home country where the firm is headquartered, and
(3) "other" countries that may be the source of labor or finance
 The three types of employees of an international firm: (1) host-
country nationals (HCNs), (2) parent-country nationals (PCNs),
and (3) third-country nationals (TCNs).

 For example, 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 an assignment to its Japanese operations
(as TCNs).
PCN Parent Country Nationals
 HCN- a host-country national (hcn) is an employee who is a citizen of a country in which
an organization's branch or plant is located, but the organization is headquartered in
another country.
 fill lower and middle management
 better grasp of culture and business practice
 Cheaper
TCN -When organizations operations are spread globally, their employees are most likely to
be from different country i.e. citizens of more than one country. Employees may be from the
organizations parent country, or host country, or even a third country
 Expertise in local culture and business practices in a foreign subsidiary
 For example – an American company sets up mfg firm in USA sets up in Costa Rica with
a large pool of Spanish speaking finds appropriate candidates in Mexico
 Host-government relations represent an important activity for the
HR department in an MNE,
 particularly in developing countries where work permits and other
important certificates are often more easily obtained when a
personal relationship exists between the relevant government
officials and multinational managers. Maintaining such
relationships helps resolve potential problems that can be caused by
ambiguous eligibility and/or compliance criteria for documentation
such as work permits. US-based multinationals, however, must be
careful in how they deal with relevant government officials, as
payment or payment-in-kind, such as dinners and gifts, may
violate the US Foreign Corrupt Practices Act (FCPA).
VARIABLES THAT MODERATE DIFFERENCES
BETWEEN DOMESTIC AND INTERNATIONAL HRM

 The cultural environment.

Culture and Its Effects on Organizations
Once upon a time there was a
great flood, and involved in this
flood were two creatures, a
monkey and a fish. The monkey,
being agile and experienced, was
lucky enough to scramble up a
tree and escape the raging waters.
As he looked down from his safe
perch, he saw the poor fish
struggling against the swift
current. With the best of
intentions, he reached down and
lifted the fish from the water.
The result was inevitable.

3-24
Culture and Its Effects on Organizations

3-25
 members of a group or society share a distinct way of life with common values,
attitudes, and behaviors that are transmitted over time in a gradual, yet
dynamic, process.
 An important characteristic of culture is that it is so subtle a process that one is
not always conscious of its effect on values, attitudes, and behaviors. One
usually has to be confronted with a different culture in order to fully appreciate
this effect.
 For people required to live and work in a new country, such differences can prove
difficult. They experience culture shock - a phenomenon experienced by people
who move across cultures. The new environment requires many adjustments in a
relatively short period of time, challenging people's frames of reference to such an
extent that their sense of self, especially in terms of nationality, comes into
question.
 An awareness of cultural differences is essential for the
HR manager at corporate headquarters as well as in the
host location. Activities such as hiring, promoting,
rewarding, and dismissal will be determined by the
practices of the host country and often are based on a
value system peculiar to that country's culture.
 A firm may decide to head up a new overseas operation with an
expatriate general manager but appoint as the HR department
manager a local, a person who is familiar with the host country’s
HR practices.
 This particular policy approach can assist in avoiding problems but
can still lead to dilemmas for senior managers. For example, in a
number of developing countries (Indonesia is one such example)
seen as a successful example of adapting to local expectations and
customs or nepotisms seen from a Western perspective not in the
best interests of the enterprise?
 Being globally consistent can help to lower costs, result
in better control and coordination, cross-subsidisation
and integration of resources, strategies and competencies.
 On the other hand, the benefits of being locally responsive
include promptness in response to address the local
needs, being quick to adapt, better access to local
resources and increased flexibility.
 Industry Type
 At one end of the continuum of international competition is the
multi domestic industry -one in which competition in each country is essentially independent of
competition in other countries. Traditional examples include retailing, distribution, and insurance.
At the other end of the continuum is the global industry, one in which a firm's competitive
position in one country is significantly influenced by its position in other countries. Eg-
commercial aircrafts, semiconductors, copiers

 Companies such as GE, Apple, Sony and Gillette pursue a global strategy by competing in all
markets, providing the same product for each market, strong centralized control, identifying
customer needs and wants across international borders, and locating value adding activities where
they can achieve the lowest cost.
 A global strategy is effective when differences between customers in countries are small and
competition is global.
McDonald’s
https://www.buzzfeed.com/spenceralthouse/17-bizarre-mcdonalds-items-america-
desperately-needs

 Below are some examples of McDonald’s tasty global marketing

initiatives:

 Middle East:
 McArabia, chicken flatbread sandwich

 Germany: McCroissant sandwich

 Eastern Canada: Seasonal McLobster sandwich...the list goes on

 At times there may be considerable demand for international
services from the HRM function (for example, when a new plant or
office is established in a foreign location and the need for expatriate
employees arises), but these activities would not be pivotal

 – Indeed, many of these services may be provided via consultants

and/or temporary employees. The main role for the HRM function
would be to support the primary activities of the firm in each
domestic market to achieve a competitive advantage through either
cost/efficiency or product/service differentiation.
 In order to build, maintain, and develop their corporate
identity, multinational organizations need to strive for
consistency in their ways of managing people on a
worldwide basis.
 Yet, and in order to be effective locally, they also need to
adapt those ways to the specific cultural requirements
of different societies. While the global nature of the
business may call for increased consistency, the variety of
cultural environments may be calling for differentiation
Complexity in operating different countries and different categories of
employees
A truly international conception of human resource management would require the following steps:

 An explicit recognition by the parent organization that its own

peculiar ways of managing human resources reflect some
assumptions and values of its home culture.

 An explicit recognition by the parent organization that its peculiar

ways are neither universally better nor worse than others but are
different and likely to exhibit strengths and weaknesses, particularly
abroad.
 An explicit recognition by the parent organization that its foreign
subsidiaries may have other preferred ways of managing people
that are neither intrinsically better nor worse, but could possibly
be more effective locally.
 A willingness from headquarters to not only acknowledge cultural
differences, but also to take active steps in order to make them
discussable and therefore usable.
 The building of a genuine belief by all parties involved that more
creative and effective ways of managing people could be
developed as a result of cross-cultural learning.
EXTENT OF RELIANCE OF THE MULTINATIONAL ON ITS
HOME-COUNTRY DOMESTIC MARKET

 A pervasive factor that influences the behavior of MNEs and

resultant HR practices is the extent of reliance of the multinational on
its home-country domestic market.
 A large domestic market will also influence the attitudes of senior
managers towards their international activities and will generate a
large number of managers with an experience base of predominantly
or even exclusively domestic market experience
 ATTITUDES OF SENIOR MANAGEMENT TO
INTERNATIONAL OPERATIONS

 The changes required to truly internationalize the HR function ‘have more

to do with states of mind and mindsets than with behaviors’.

 It is likely that if senior management does not have a strong international

orientation, the importance of international operations may be
underemphasized (or possibly even ignored) in terms of corporate goals and
objectives. In such situations, managers may tend to focus on domestic
issues and minimize differences between international and domestic
environments.
 Not surprisingly, senior managers with little international
experience (and successful careers built on domestic
experience) may assume that there is a great deal of
transferability between domestic and international HRM
practices.
 This failure to recognize differences in managing human
resources in foreign environments – regardless of whether it is
because of ethnocentrism, inadequate information, or a lack of
international perspective – frequently results in major
difficulties in international operations.
 https://www.youtube.com/watch?v=l-
Yy6poJ2zs&ab_channel=TEDxTalks