What is IHRM?

• 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
management and so on.
A Model of IHRM

1–5
What does IHRM add into the Traditional
Framework of HRM?
Types of employees
Within and cross-cultural workforce diversity
Coordination
Communication
Human resource activities
Procurement
Allocation
Utilization of human resources
Nation/country categories where firms expand and
operate
Host country
Parent country
Third country

1–6
 OBJECTIVES OF IHRM
• Create a local appeal without compromising
upon the global identity.
• Generating awareness of cross cultural
sensitivities among managers globally and
hiring of staff across geographic boundaries.
• Training upon cultures and sensitivities of the
host country.
 3. NEED FOR IHRM
• Managing expatriates
• Globalization has forced HRM to have
international orientation
• Effectively utilise services of people at both
the corporate office and at the foreign plants
• Hence need to understand human resource
management in a global perspective
 Why International Human
Resource Management? (cont’d)

The role of HR in International Operations

Managing a Multicultural Workforce
Developing Managerial Talent in a Global
Business Environment

1–10
Globalization, Uncertainty, Complexity
and IHRM
Globalization
and
New Technologies

New Environment – Increased

Environmental Uncertainty

More Complexity
More Dynamism
Less Richness 1–11
Globalization and Importance of IHRM

Uncertainty, Complexity, Hypercompetition

Need to Refocus on Persons, Roles and

Integration for Global Performance HR

Capabilities
People Processes
Persons in Roles

1–12
 Evolution Of IHRM

7.pdf
FUNCTIONS OF IHRM
RECRUITMENT
SELECTION
EXPATRIATES
PERFORMANCE
APPRAISAL

TRAINING AND DEVELOPMENT

COMPENSATION
WOMEN IN INTERNATIONAL BUSINESS
DUAL CAREER GROUPS
INTERNATIONAL INDUSTRIAL RELATIONS

TRADE UNIOUNS
The General Field of HR
Major Functions and Activities
• Human resource planning
• Staffing
• Recruitment
• Selection
• Placement
• Performance appraisal
• Training and development
• Compensation and benefits
• Industrial relations

1–16
Human Resource Management Functions
•Planning for Organizations, Jobs, and
People
The Strategic Management of Human
Resources
Human Resource Planning
•Acquiring Human Resources
Selection
Recruitment
Integration

1–17
Human Resource Management
Functions (cont’d)
Building and Motivating Performance
HR Development
Performance Appraisal
Compensation Systems

1–18
 Human Resource Management
Functions (cont’d)
Maintaining Human Resources
Benefits
Safety & Health
Collective Bargaining
Organizational Exit
Employment transitions
Multinational Human Resource Management

1–19
IHRM MODEL
Diversity as an
Organizational and
HR Challenge in
MNE

Source: Marilyn Loden and Judy B. Rosener, Workforce America: Managing Employee Diversity as a Vital Resource, p. 20.
1–21
ACTIVITIES INVOLVED IN IHRM
Role & Activities of IHRM / Points of
Difference b/w Domestic HRM & IHRM
More HR activities

Need for a broader perspective

More involvement in employee personal lives

Changes in emphasis as the workforce mix of

expatriates and locals vary

Risk exposure

More external influences

6
More Human Resource Activities
Human • Difficulty in implementing HR in host
countries
Resourc • Developmental opportunities for
e international managers.

Planning
• Ability to mix with organisation’s culture
Employee • Ethnocentric, polycentric or geocentric
staffing approach
Hiring • Selection of expatriates
• Managing repatriation process

• Emphasis on cultural training

Training & • Language training
Development • Training in manners & mannerisms
7
 • Devising an appropriate strategy to compensate
expatriates
• Minimising difference in pay between parent,
Compensation host & third country nationals
• Issues relating to the re-entry of expatriates into
the home country

• Constraints while operating in host

countries need to be considered.
Performance
• Physical distance, time differences & cost of
Management reporting system add to the complexity.

• Handling industrial relations problems in a

subsidiary.
Industrial
• Attitude of parent company towards unions
Relations in a subsidiary
8
 Need for Broader Perspective

Pay issues
• Different countries, different currencies
• Gender based pay in Korea, Japan, Indonesia

Health insurance for employees & their families

Overtime working – Korean & Japanese firms

Promotions based on seniority or merit

9
 • More involvement for both parent-country &
More third-country nationals
Involvement in • Housing arrangements
Employee’s • Health care
• Remuneration packages
Personal Lives • Assist children left behind in boarding
schools

Changes in
emphasis as • Need for parent-country & third-country
the workforce nationals decrease as more trained locals
become available.
mix of • Resources reallocated to selection,
expatriates and training &
management development
locals vary
10
 • Physical safety of the employees.
Risk
Exposure • Failure of expatriates to perform well 
financial losses to the firm

• Dealing with ministers, political figures,

External economic & social interest groups

• Hiring procedures dictated by host

Influence country.
• Catch up with local ways of doing
business.
11
Variables that Moderate Differences between
Domestic HR and IHRM

1–29
 How It Is Different from
Domestic HRM
• Domestic HRM is done at national level and IHRM is done
at international level.
• Domestic HRM is concerned with managing
employees belonging to one nation and IHRM is concerned
with managing employees belonging to many nations
(Home country, host country and third country employees)
• Domestic HRM is concerned with managing limited number
of HRM activities at national level and IHRM has concerned
with managing additional activities such as
expatriate management.
• Domestic HRM is less complicated due to less influence
from the external environment. IHRM is very complicated
as it is affected heavily by external factors such as cultural
distance and institutional factors.
Reasons for Growing Interest in IHRM

Effective HRM 
Globalisation of determinant of
Business success in
international business

Movement to network
organisations from Significant role in
traditional hierarchical implementation &
structures control of strategies

12
 Forces for Change

•Global Competition:

•Growth in mergers, acquisitions and alliances:

•Organization Restructuring:

•Advances in technology and telecommunication:

3.1. Opportunities
•Homogeneity of Demand
•Spread Research & Development Costs
•Increased Market Size
•Rising Economies of Scale
•Favorable Government Policies
•Exploit Local Advantages
Suggest Risks ?
 Risks
•Failure to understand Foreign Customer Preference
•Failure to Appreciate the Level, Intensity & Complexity
of Competition in Global Market
•Failure to understand Host Country’s Rules of the
Game
•Failure to Understand Political Risks
 ISSUES IN IHRM
• Managing International Assignments
• Employee and Family Adjustments
• Selecting the right person for foreign
assignments
• Culture and Gauge
• Language and Communication
 Main challenges in IHRM
cont.
 Diff erent labor laws
 Diff erent political climate
 Diff erent stage(s) of technological advancement
 Diff erent values and attitudes e.g. time, achievement,
risk taking
 Ro l e s
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
Organizational Structure &
HRM
Export Department
Use of Subsidiary
International Division
Global Product Division
Division
Global Area Division
Matrix
Network
Control & Coordination
147094581-Global-Human-Resource-Planning.pdf
Strategic Decisions and Their Implications for
Human Resource Management

1–53
Strategic Decisions and
Their Implications for
Human Resource
Management (cont’d)

1–54
 EFFECTIVE IHRM
IMPLEMENTATIO
N required in the formulation and
The following checklist identifies some of the critical
decisions/actions
implementation of an effective IHR strategy.
1. As certain the current and intended nature of
international operations in the organisation
(multi- domestic, international, global or
2. transnational?)
Determine the extent to which HR policies
practices
and should be standardised or localised
in accordance with overall organisational strategy.
3. Assess the extent to which local cultural, social,
political, economic and legal factors will impinge on
any attempts to apply standard HR policies if
integration is a key factor in organisational strategy.
4. Ensure a computerised database of global
human resources is used if integration is
desired.
5. Work with the senior management team to
identify the competencies required to achieve
global organisational objectives.
6. Work with national HR and line managers to
formulate IHR policies and practices in the key
areas of sourcing, development and reward
which will embed a transnational mindset in
the organisation.
 Case Study
New Doc 2020-01-21 15.28.53.pdf
THANK YOU