Session 10: International Human Resources

Management
MGT 3403_International Business Management
Batch 20.2 / 20.3

Ms. Dilki Hansika

Department of Management

NSBM Green University - Department of Management 1

International HRM
Definition of HRM
• Typically, HRM refers to those activities undertaken by an
organization to effectively utilize its human resources. These
activities would include at least the following:
1 Human resource planning.
2 Staffing (recruitment, selection, placement).
3 Performance management.
4 Training and development.
5 Compensation (remuneration) and benefits.
6 Industrial relations.
 Domestic Human Resource
Management

In simple terms, DHRM is about

………………………………………………
….., while IHRM
involves………………………………………
………. The key difference lies in the
complexity and considerations associated
with the global context in IHRM compared to
the more localized focus of DHRM

4
 Defining international HRM
The process of procuring,
allocating and effectively utilizing
human resources in an
international business is called
international human resources
management (IHRM).

IHRM is the management of HR in

business operations in at least two
nations.
Composition of the Cultural Environment of
International Business
Religion Values and Attitudes
Language
sacred objects Toward:
spoken
philosophical time
written language
systems achievement
official language
beliefs & norms work
linguistic pluralism
prayer wealth
language hierarchy
taboos change
international languages
holidays scientific method
mass media
rituals risk-taking
Education
Law
formal education
common law
vocational training
code law
primary education
foreign law
secondary education
home country law
higher education
antitrust policy
literacy level
international law
human resources
regulation
planning
Technology and Material
Politics Culture Social Organization
nationalism transportation kinship
sovereignty energy systems social institutions
imperialism tools & objects authority structures
power communications interest groups
national interests urbanization social mobility
ideologies science social stratification
political risk invention status systems
 Defining international HRM
 IHRM can be defined as set of
activities aimed managing
organizational human resources at
international level to achieve
organizational objectives and achieve
competitive advantage over
competitors at national and
international level.

 IHRM includes typical HRM functions such as recruitment,

selection, training and development, performance appraisal
and dismissal done at international level and additional
activities such as global skills management, expatriate
 Need for IHRM
 Managing expatriates
An expatriate (often shortened to
expat) is a person residing in a
country other than their native
country.

 Globalization has forced HRM to

have international Orientation

 Effectively utilize services of

people at both the corporate office
and at the foreign plants
Selection of Expatriates
• Technical competence
• Adaptability
• Communication skills
• Family stability
• Gender
• Age
• Ethnicity

10-11
Personality of Inability to cope
expatriate with overseas
responsibilities

Personal Why Expatriate

intentions Assignments
Fail

Family Lack of cultural

pressures skills

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 17–10

Inter-relationships between approaches to the field
Morgan’s 3D
Model of
International
HRM
 Type of Employees in MNCs

•IHRM is concerned about managing human

resources at Multinational Companies and it
involves managing 03 types of employees
namely,

1.Parent Country Nationals (PCNs)

2. Host Country Nationals (HCNs)

3. Third Country Nationals (TCNs)

 1. Parent Country Nationals
Type of Employees (PCNs)
Are employees from the country
in which the organization is based
(Headquarters)
2. Host country nationals (HCNs)
Are employees from the country in
which the subsidiary is based.

3. Third country nationals (TCNs)

Are employees who are working in a
different country (i.e. Not a PCN or
HCNs)
International assignments create expatriates
 Parent Country Nationals (PCN)
Advantages Disadvantage
Difficulties in adapting to the
Familiarity with the parent
foreign language and the
organisation’s goals, objectivities,
socioeconomic, political, cultural
policies and practices
and legal environment
Excessive costs involved in
Effective communication with
selecting and developing
parent country staff
expatriate managers
Employees gain experiences
Family adjustment problems
worldwide
 Host country nationals (HCNs)
Advantage Disadvantage
Familiarity with the
Difficulties in exercising effective
socioeconomic, political and legal
control over the subsidiary's
environment and with business
operation
practices in the host country
Lower costs incurred in hiring staff Communication difficulties in dealing
in comparison to PCNs and TCNs with the parent company
Provides opportunities for Lack of opportunities for the home
advancement and promotion to country’s internationals to gain
local nationals; increases their international and cross -cultural
commitment and motivation experiences
Responds effectively to the host
country’s demands
 Choosing an Approach to IHRM

Corporate Level of
Political and
international development in
legal concerns
strategy foreign locations

Technology and
Organizational Cultural
the nature of
life cycle differences
the product
Challenges of International HRM

• Deployment
• Knowledge and Innovation Dissemination
• Identifying and Developing Talent
on a Global Basis

17–21
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
Compensation
Compensation rates are relatively high in
organizations
To hire and retain highly skilled employees, these organizations must
pay higher wages than other organizations.
In addition, variable transactional compensation provides higher
wages to top performers.
The lack of emphasis on long-term contribution means that newly
hired employees are often paid the highest wages
Designed to provide immediate reward for high contribution

Department of Management