INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Human Resource Management

• Human Resource Management (HRM) involves all management decisions and practices that directly affect the people who work for the organization.

• Human Resources the people who work for the organization.

What is IHRM?

• International HRM (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.

What is IHRM?

• IHRM is performing HRM and its related activities and arranging for related and necessary immigration facilities for prospective and current expatriate employees,by organizations operating in domestic and/or foreign countries

OBJECTIVES of IHRM

• To reduce the risk of international human resource

• To avoid cultural risks • To avoid regional

disparities• To manage diversifies

human capital

MAJOR DIMENSIONS OF IHRM

IHRM

BroaderRelationship&Complexities

Influence of international environment

WiderNationality

Enduring complexities of

HRM activities

Variety of Functions

Different approachesFor the Functions

Three Approaches to IHRM• Cross-cultural management

– Examine human behavior within organizations from an international perspective

• Comparative HRM and Industrial Relations– Seeks to describe, compare and analyze HRM

systems and IR in different countries

• HRM in multinational firms– Explore how HRM is practiced in multinationals

Interrelationships between Approaches to the Field

STAGES OF INTERNATIONALISATION

• Stage I- Domestic Company

• Stage II- International Company

• Stage III- Multinational Company

• Stage IV-Global Company

• Stage V- Transnational Company

Strategies of international, multinational, global & transnationals organizations

• International company – transports its business outside home country; each of its operations is a replication of the company's domestic experience; structured geographically. It focus on domestic practices,but extend the wings to foreign countries.

Strategies of international, multinational, global & transnational organizations

• Multinational company (MNC)– grows and defines its business on a worldwide basis, but continues to allocate its resources among national or regional areas to maximize the total. It formulates different strategies for different markets.Ex- TOYOTA

Strategies of international, multinational, global & transnational organizations

• Global organizations – treat the entire world as though it were one large country. Global companies either produce in one country and market globally or produce globally and market domestically.

Ex-DR.REDDY’S LAB

Strategies of international, multinational, global & transnational organizations

• Transnational organization(TNC) - Use specialized facilities to permit local responsiveness; more complex coordination mechanism to provide global integration. Such companies produces, markets,invest and operates across the world.

• EX-BOEING AIRCRAFTS.

Global Transnational

International Multinational

Global efficiency

HighLow

High

Local responsiveness

Global efficiency and local responsiveness of different types of firms

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

A Model of IHRM

Categories of employees in an MNE

• Parent-country nationals (PCNs) – Employees who were

born and live in a parent country.

• A parent (or home) country: the country in which a company’s corporate headquarters is located.

• Host-country nationals (HCNs) – Employees born and raised

in a host country.• Host country: a country in

which the subsidiary or branch of an MNC is located.

• Third-country nationals (TCNs) – Employees born in a

country other than a parent or host country.

Categories of employees in an MNE

What is an expatriate and inpatriates?

The term expatriate from the point of view of IHRM is the one who is working and residing in the foreign country during his/her tenure of foreign employment.

Expatriate are all types of foreigners.

Inpatriates are those HCN’s transferred to headquarters of MNC.

International Assignments Create Expatriates

1.1. Inability of spouse to adjustInability of spouse to adjust

2.2. Manager’s inability to adjustManager’s inability to adjust

3.3. Other family problemsOther family problems

4.4. Manager’s personal or emotional Manager’s personal or emotional maturitymaturity

5.5. Inability to cope with larger overseas Inability to cope with larger overseas responsibilityresponsibility

6.6. Lack of technical competenceLack of technical competence

7.7. Difficulties with new environmentDifficulties with new environment

Reasons for Expatriate Failure

Why IHRM

?

Factors that Influence the Global Work Environment

• To achieve higher rates of profits.To achieve higher rates of profits.• Expanding the production capacities beyond Expanding the production capacities beyond

the demand of Domestic Country.the demand of Domestic Country.• Severe competition in the home country.Severe competition in the home country.• Limited home marketLimited home market• Availability of quality HR at less cost.Availability of quality HR at less cost.• Nearness to raw-materialNearness to raw-material• To increase market shareTo increase market share• Liberalisation & GlobalisationLiberalisation & Globalisation

FACTORS INFLUENCING INTERNATIONAL BUSINESS

• High standard of livingHigh standard of living• Increase socio-economic welfareIncrease socio-economic welfare• Wider marketsWider markets• Reduced risksReduced risks• Large-scale economiesLarge-scale economies• Economic growth of the worldEconomic growth of the world..• Cultural transformation.Cultural transformation.• Division of labor and specialisationDivision of labor and specialisation..

Advantages of International Business

More HR activities: taxation, culture More HR activities: taxation, culture orientation, administrative servicesorientation, administrative services

The need for a broader perspective: cater to The need for a broader perspective: cater to multiple needsmultiple needs

More involvement in employees’ personal More involvement in employees’ personal lives: adjustment, spouses, childrenlives: adjustment, spouses, children

Changes in emphasis as the workforce mix of Changes in emphasis as the workforce mix of expatriates and locals varies.expatriates and locals varies.

Risk exposure: expatriate failure, terrorismRisk exposure: expatriate failure, terrorism Broader external influences: government Broader external influences: government

regulations, ways of conductregulations, ways of conduct

Differences between Domestic HRM and IHRM

Differences between Domestic HRM and IHRM: variables

• Complexity involved in operating in Complexity involved in operating in different countries, varied nationalities of different countries, varied nationalities of employeesemployees

• The different Cultural EnvironmentThe different Cultural Environment• The industry or industries with which the The industry or industries with which the

MNC is involvedMNC is involved• Attitudes of Senior ManagementAttitudes of Senior Management• Extent of reliance of MNC on home country Extent of reliance of MNC on home country

domestic marketdomestic market

Variables that Moderate Differences between Domestic HR and IHRM

Qualities of Global Managers

• Understand the worldwide business• Learn about many cultures • Work with many types of people• Create cultural synergy• Adapt to living in many cultures• Use cross-cultural skills daily• Treat foreign colleagues as equals• Use foreign assignments as career

development

New HR responsibilities

External influences of Nation and culture

Great Risk exposure

Managing the mix of expatriatesAnd locals

Greater involvement in the Employees’ personal lives

The need for a broaderperspective

Complexity of Global Human

Resource Management

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 labour laws• Different political climate• Different stage(s) 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

Whirlpool’s Globalization

• Where to go among alternative markets?– $23/hr in the U.S. including the benefits– $3/hr in Mexico – $1/hr in China– $32/hr in Germany

• Mode of entry?– Acquisition of Phillips N.V. for more than $1 billion in 1991

• Whirlpool’s total employees today:– 23,000 in the U.S.– 45,000 overseas

Whirlpools Global Network• The high-end $1,200 model from

Germany– The smaller front loaders from Mexico

• Mexican engineers, foremen and supervisors had 18 months training in Germany

– Top loading machines made in Ohio for Americans

• Microwave ovens engineered in Sweden and made in China

• Refrigerators assembled in Brazil and exported to Europe

EQUAL EMPLOYEE OPPORTUNITY

• Equal Employment Opportunities (EEO) means eliminating barriers to ensure that all employees are considered for the employment of their choice and have the chance to perform to their maximum potential.

OBJECTIVES

• To promote recognition and acceptance of everyone's right to equality of opportunity

• TO eliminate, as far as possible, discrimination against people by prohibiting discrimination on the basis of various attributes

• TO eliminate, as far as possible, sexual harassment

• TO provide redress for people who have been discriminated against or sexually harassed.

EQUAL EMPLOYEE OPPORTUNITY

Discrimination on the basis of:-• Disability• Race• Age• Minority• Marital statusEqual employment opportunity act is

implemented by many countries to stop these discriminations.

Global Area Division

Multinational Matrix Structure

Transnational Network Structures

CULTURAL SHOCK

The cultural shock refers to a situation in which an expatriate is unable to adjust emotionally to a new cultural environment in which he or she is expected to work.Some typical manifestation of a cultural shock are-

• Psychological disorientation• Negative feeling for the host country and its people.• Strong desire to return to one’s own country.

Thank you!!!