INTERNATIONAL HUMAN

RESOURCE MANAGEMENT PEH 401

Ms. Niharika Agnihotri

HOD & Assistant Professor
BM Department
 DEFINING INTERNATIONAL HRM
 International Human Resource Management (IHRM) is a field of study
that focuses on the management of human resources in multinational
corporations and other global organizations. It involves the application
of HRM principles and practices to managing people in different
cultural, institutional, and legal contexts across national borders.
 International businesses are required to recruit, train, motivate, nurture
and retain apart from effectively utilizing their services at all levels of
functioning be its corporate office, at the foreign production units
plants, therefore, the process of procuring, allocating and effectively
utilizing human resources in international business is called
International Human Resource Management.
 International HRM is concerned with identifying and understanding
how the MNC’s manage their geographically dispersed worked force
in order to leverage their HR resources for obtaining local as well as a
global competitive advantage.
 ‘International HRM’ refers to international human resource
management, which is a comprehensive department that
undertakes all the functions and responsibilities of HR including
recruitment, payroll and benefits, leaves and attendance, training,
expenses, etc. on a global level. It is used by companies which
have presence in multiple countries or continents.
 The extra functionalities handled by an international HR
management include managing and engaging employees
throughout all the branches of the company around the world as
well as establishing common policies by taking into account the
local laws, customs and culture.
 International human resource management is the process of
employing, training and developing and compensating the
employees in international and global organizations. An
international company is one which has subsidiaries outside the
home-county which rely on the business expertise or
manufacturing capabilities of the parent company.
 International Human Resource Management (IHRM) is the process of
procuring, allocating, and effectively utilizing human resources in a
multinational corporation, while balancing the integration and
differentiation of HR activities in foreign locations. – Dowling, Festing,
and Engle (2017)
 International Human Resource Management (IHRM) is the process of
procuring, allocating, and effectively utilizing human resources in a global
organization. – Society for Human Resource Management (SHRM)
 IHRM is the process of managing people across international boundaries,
and includes the full range of activities involved in the recruitment,
selection, development, and retention of employees in a global
environment. – International Labour Organization (ILO)
 According to Pigors and Myers, “International or domestic human resource
management is a method of developing the potentialities of employees, so
that they get maximum out of their work and give best efforts to the
business organization”.
 In the words of Edwin B. Flippo, “International or domestic HRM involves
the planning, organizing, directing and controlling of the procurement,
development, compensation, integration and maintenance of people for the
purpose of contributing to organizational, individual and social goals.”
 DIFFERENCE BETWEEN DOMESTIC AND
INTERNATIONAL HRM
S.N
IHRM DHRM
o.
IHRM stands for International Human Resource DHRM stands for Domestic Human Resource
01.
Management. Management.

International HRM is involved with the

management of employees in the three nation Domestic HRM is involved with the management of
02.
categories i.e. home country, host country employees in only one or single country.
and third country.

Simply it can be said as IHRM is done at Simply it can be said as DHRM is done at national
03.
international level. level.

In IHRM staffs are placed and work outside In DHRM staffs are placed and work within the
04.
national boundaries. national boundaries.

05. It addresses a broad range of HRM activities. It address a narrow range of HRM activities.

In this there is a high involvement of HR In this there is less involvement of HR manager in

06.
manager in the personal life of employees. the personal life of employees.

In this there is high exposure to risks in In this there is limited risks in domestic
07.
international assignments. assignment.

DHRM deals with few and limited external factors

IHRM deals with several external factors such
08. so it is less complicated as compared to IHRM due
as government regulations of foreign country.
to less influence from external factors.
ORGANIZATIONAL STRUCTURE IN MNC
INTERNATIONAL STAFFING
Organizational structure in multinational corporations (MNCs) for international staffing typically involves several key
components:
1. Global Headquarters: This is the central hub where overall strategy, decision-making, and coordination of
international operations occur.
2. Regional Headquarters: MNCs often establish regional headquarters to oversee operations in specific geographic
areas. These offices manage regional strategies, local subsidiaries, and coordinate with the global headquarters.
3. Subsidiaries: These are locally incorporated entities in various countries where the MNC operates. Subsidiaries
may have their own management teams responsible for day-to-day operations, sales, marketing, and compliance
with local regulations.
4. International Assignees: MNCs frequently deploy international assignees, including expatriates (employees from
the parent country working abroad), inpatriates (foreign employees brought to work at the global or regional
headquarters), and third-country nationals (employees from neither the parent nor the host country). These
assignees help transfer knowledge, maintain corporate culture, and facilitate communication between headquarters
and subsidiaries.
5. Local Staff: MNCs also hire local staff in each country of operation. Local employees bring valuable insights into
the local market, culture, and customer preferences. They typically fill operational roles and may also hold
management positions within subsidiaries.
6. Matrix Structure: MNCs often adopt a matrix organizational structure to balance global consistency and local
responsiveness. This structure allows employees to report both to functional departments (e.g., marketing, finance)
and geographic divisions (e.g., Asia-Pacific, Europe), facilitating coordination and communication across different
levels of the organization.
7. Virtual Teams: With advancements in technology, MNCs increasingly rely on virtual teams composed of members
from different locations who collaborate remotely on projects. Virtual teams allow for flexibility, cost savings, and
access to a diverse talent pool, but also present challenges in terms of communication, coordination, and team
dynamics. Effective international staffing in MNCs involves aligning organizational structure with global business
objectives, leveraging diverse talent pools, and fostering cross-cultural collaboration and communication.
 THE ROLE OF AN EXPATRIATES
Expatriate is a term used to describe an employee who is temporarily or permanently assigned to work in a foreign
country. Expatriates may be assigned to work in a foreign country by their company, or they may be sent to
work in a foreign country by their government.
The role of expatriates in multinational corporations (MNCs) is multifaceted and crucial for ensuring the success of
international operations. Here are some key aspects of their role:
1. Knowledge Transfer: Expatriates often serve as conduits for transferring knowledge, skills, and best practices
from the headquarters to subsidiaries or between different international locations. They bring expertise in
company policies, procedures, and corporate culture, helping to maintain consistency across borders.
2. Cross-Cultural Communication: Expatriates play a vital role in facilitating communication and collaboration
between headquarters and local subsidiaries, as well as among diverse teams within the organization. Their
understanding of both the home and host cultures enables them to bridge cultural gaps and facilitate effective
interactions.
3. Leadership and Management: Expatriates may hold leadership or managerial positions in foreign subsidiaries,
where they are responsible for guiding local teams, implementing corporate strategies, and achieving business
objectives. They provide direction, mentorship, and support to local staff, helping to align their efforts with the
broader organizational goals.
4. Change Management: Expatriates often lead or support change initiatives, such as the introduction of new
processes, systems, or organizational structures, in international locations. They help to navigate resistance to
change, address cultural differences, and ensure successful implementation of corporate initiatives.
5. Talent Development: Expatriates contribute to talent development by identifying high-potential employees,
providing training and development opportunities, and grooming local talent for leadership roles within the
organization. They serve as role models and mentors, helping to build a pipeline of future leaders with global
perspectives.
6. Problem-Solving and Decision-Making: Expatriates are often called upon to resolve complex problems, make
critical decisions, and manage crises in international settings. Their experience, adaptability, and cross-cultural
competence enable them to navigate challenging situations and find effective solutions.
Overall, expatriates play a crucial role in driving international expansion, facilitating cross-border collaboration,
and ensuring the success of MNCs in diverse cultural and business environments. Their contributions extend
beyond their individual roles, impacting the organization’s performance, growth, and global competitiveness.
 THE ROLE OF NON EXPATRIATES
The role of non-expatriates, also known as local staff or host-country nationals, in multinational corporations (MNCs)
is equally vital for the success of international operations. Here are some key aspects of their role:
1. Local Market Expertise: Non-expatriates possess invaluable knowledge of the local market, including consumer
preferences, cultural nuances, regulatory requirements, and business practices. They provide insights that are
essential for tailoring products, services, and marketing strategies to meet the needs of local customers.
2. Operational Excellence: Non-expatriates are responsible for day-to-day operations in their respective countries or
regions. They manage sales, distribution, logistics, and other functions, ensuring efficient and effective execution
of business activities. Their operational expertise contributes to the overall productivity and profitability of
international operations.
3. Cultural Liaison: Non-expatriates serve as cultural liaisons between headquarters and local teams, helping to
bridge cultural differences and facilitate communication and collaboration. They play a crucial role in fostering a
positive work environment, promoting cross-cultural understanding, and building cohesive teams across diverse
backgrounds.
4. Customer Relationship Management: Non-expatriates are often the primary point of contact for local customers,
suppliers, and partners. They build and maintain relationships, address customer inquiries and concerns, and
ensure high levels of customer satisfaction. Their ability to understand and connect with local stakeholders is
essential for building trust and loyalty in international markets.
5. Adaptation and Innovation: Non-expatriates contribute to adaptation and innovation by identifying market
trends, customer needs, and competitive dynamics in their local markets. They provide feedback and insights that
inform product development, marketing campaigns, and strategic decision-making, driving continuous
improvement and innovation within the organization.
6. Leadership and Talent Development: Non-expatriates may hold leadership positions within their local
subsidiaries, where they are responsible for guiding and developing local teams. They nurture talent, promote
professional growth, and create opportunities for advancement, contributing to the development of a skilled and
diverse workforce.
Overall, non-expatriates play a critical role in the localization of global strategies, the execution of business
operations, and the sustainable growth of MNCs in international markets. Their deep understanding of local
dynamics, combined with their commitment to excellence and innovation, makes them indispensable
contributors to the success of multinational organizations.
THE ROLE OF THE CORPORATE HR FUNCTIONS
The corporate HR function in multinational corporations (MNCs) plays a crucial role in managing human capital across
diverse geographical locations and ensuring alignment with organizational objectives. Here are some key aspects of their
role:
1. Strategic HR Planning: Corporate HR develops and implements strategic HR plans that align with the overall business
strategy of the organization. They assess workforce needs, identify talent gaps, and develop plans to acquire, develop,
and retain talent to support business growth and expansion into new markets.
2. Global Talent Acquisition: Corporate HR oversees global talent acquisition efforts, including recruiting and hiring
employees for key positions across different countries and regions. They develop recruitment strategies, establish
selection criteria, and ensure compliance with local regulations and cultural sensitivities.
3. International Mobility and Expatriate Management: Corporate HR manages international assignments and expatriate
programs, including the selection, training, compensation, and relocation of expatriate employees. They provide support
to expatriates and their families, address cross-cultural challenges, and facilitate smooth transitions between assignments.
4. Global Compensation and Benefits: Corporate HR develops and administers global compensation and benefits programs
that are competitive, equitable, and compliant with local laws and market practices. They design compensation structures,
manage expatriate compensation packages, and ensure alignment with corporate policies and objectives.
5. Performance Management and Development: Corporate HR oversees performance management processes, including
goal setting, performance evaluation, and feedback mechanisms, to drive employee engagement, development, and
accountability across international locations. They provide training and development opportunities to enhance employee
skills and competencies.
6. Cross-Cultural Training and Diversity Initiatives: Corporate HR designs and delivers cross-cultural training programs
to help employees navigate cultural differences and work effectively in diverse multicultural environments. They
promote diversity and inclusion initiatives to foster a culture of respect, collaboration, and innovation across the
organization. 7. Compliance and Risk Management: Corporate HR ensures compliance with local labor laws, regulations,
and ethical standards in all countries of operation. They mitigate legal and compliance risks by establishing and enforcing
HR policies and procedures that are consistent with global standards and best practices.
8. HR Technology and Data Analytics: Corporate HR leverages HR technology and data analytics to streamline HR
processes, improve decision-making, and enhance employee experiences. They use data-driven insights to identify
trends, anticipate talent needs, and optimize HR strategies and initiatives on a global scale.
Overall, the corporate HR function plays a central role in driving organizational effectiveness, fostering employee
engagement, and enabling sustainable growth and success in the complex and dynamic global business environment of
MNCs.
UNIT - II