Chapter seven
International Human
Resource Management
IHRM
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HRM is set of organizational activities aimed at effectively
managing and directing human resources/labor towards
achieving organizational goals.
Typical functions performed by HRM staff would be
recruitment, selection, training and development,
performance appraisal, dismissal, managing promotions
and so on.
Then what is International Human Resource Management
(IHRM)?
IHRM can be defined as set of activities aimed managing
organizational human resources at international level to
achieve organizational objectives and competitive advantage
over competitors at national and international level.
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cont..
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.
In simple terms, IHRM is concerned about managing
human resources at Multinational Companies (MNC)
it involves managing 3 types of employees namely,
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1)Home country employees- Employees belonging to
home country of the firm where the corporate head quarter
is situated.
ADVANTAGES DISADVANTAGE
Familiarities with the goals, Difficulties in adapting to the foreign
objectives, policies systems and language, culture and environmental issues
practices of the headquarter like socio-economic, potential and legal
environment
Effective liaison/relationship and Excessive cost of maintaining expatriate
communication with home office managers and their families abroad
personnel
Easier exercise of control over the The host country nationals lose jobs
subsidiary/branchs operation
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2)Host (Parent)country employees- Employees
belonging to the nation in which the subsidiary is
situated.
ADVANTAGES DISADVANTAGE
Familiarity with the culture and environmental Difficulties in exercising effective
factors like socio-economic, political and legal control over the subsidiary
environment and with business practices in the operations.
host country.
Low cost of staff Communication difficulties in
dealing with headquarter
Provide opportunities for human resource Lack of opportunities for gaining
development of HCNs leading to increase in the international and cross-cultural
commitment and motivation experiences
Responds effectively to the host country
demands for localization of the subsidiary
operations
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3)Third country employees- These are the employees who
are not from home country/host country but are employed
at subsidiary or corporate headquarters.
Advantages Disadvantage
Compromise between PCNs and HCNs Host countries sensitivity with respect to
nationals of specific countries.
TCN are usually career international Local nations are impended in their effort to
business managers upgrade their own ranks and assume
responsible positions in the multinational
TCN are less expensive to maintain than subsidiaries
PCN
TCN may be better informed about the
host environment than PCN
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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 global competitive advantage.
Importance of IHRM
The importance of IHRM is getting increase everyday
as we have globalization and internationalization over
the world. As a result, numbers of the multinational
companies are getting increase.
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Objective of IHRM
Remaining competitive throughout the world
Efficient
Locally responsive
Flexibly and adaptive
Capable to transforming learning across their globally
dispersed units
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The scope of HRM
1. Personnel Aspect-This is concerned with manpower
planning, recruitment, selection, placement, transfer,
promotion, training and development, layoff and
retrenchment, remuneration, incentives, productivity etc.
2. Welfare Aspect-It deals with working conditions and
amenities such as canteens, creches, rest and lunch rooms,
housing, transport, medical assistance, education, health and
safety, recreation facilities, etc.
3. Industrial relations aspect-This covers union-
management relations, joint consultation, collective
bargaining, grievance and disciplinary procedures, settlement
of disputes, etc.
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Differences between domestic HRM and
International HRM (IHRM)
Domestic HRM IHRM
done at national level done at international level.
concerned with managing employees concerned with managing employees
belonging to one nation belonging to many nations
concerned with managing limited concerned with managing additional
number of HRM activities at national activities such as expatriate management.
level
is less complicated due to less very complicated as it is affected heavily by
influence from the external external factors such as cultural distance
environment. and institutional factors.
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cont..
The international context of HR is different from its
domestic counterpart in a number of ways
1 Being responsible for a greater number of functions and
activities such as selection, training and management of
international assignees
2 Having to expand ones area of expertise to include a
much broader knowledge of foreign country employment
laws and global organization design
3 having to get much more closely involved with employees
lives as the firm moves employees to foreign assignment
4 being involved with greatly expanded and constantly
changing mix of employees (from the host countries and
foreign and locals) adding considerable diversity and
complexity to the HR tasks. 12
Functions of IHRM
Four main functions of global human resource
management are vital concepts to the strategic operation
of a business.
Recruitment
Attracting, hiring and retaining a skilled workforce is
perhaps the most basic of the human resources
functions.
Training
Even when an organization hires skilled employees,
there is normally some level of on-the-job training that
the human resources department is responsible for
providing.
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Professional Development
Closely related to training is HR's function in professional
development. But whereas training needs are centered around
the organization's processes and procedures, professional
development is about providing employees with opportunities
for growth and education on an individual basis.
Benefits and Compensation
While the management of benefits and compensation is a
given for human resources, the globalization of companies
in the twenty-first century has meant that HR must now
adapt to new ways of providing benefits to an
organization's employees.
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Major issues in IHRM
According to Hendry (1994), there are three main issues in
IHRM
1) the management and development of expatriate -selection,
training, compensation and repatriation of expatriate failures.
2) the internationalization of management throughout the
organization (host country, parent country and other third
country’s)
3) the need to internationalize the hole organization by
creating a new corporate culture reflecting the need for
greater international experiences across cultural interaction of
doing business at home as well as abroad mainly cultural
communication and language and communication
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IHRM and training and development
Training and development increases in complexity as
MNEs move abroad.
Types of training and development depend on a number
of factors:
The degree to which management is centralized.
The types of workers employed in subsidiaries or joint
ventures.
The importance of branding, and the extent to which
employees are expected to reflect the brand.
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