INTERNATIONAL HRM

• International Human Resource Management (IHRM)


  The management of human resources in a global business environment
• Why IHRM is important

  • Increasing globalization, firms and employees moving all over the world
  • Major problems in international operations due to human resource management blunders
  • Need to understand HR management in a global perspective
• The role of HR in International Operations

  • Managing a Multicultural Workforce
  • Developing Managerial Talent in a Global Business Environment
• Globalization, Uncertainty, Complexity and IHRM


  • New Environment - Increased Environmental Uncertainty
  • More Complexity
  • More Dynamism
  • Less Richness
• 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
• Three Approaches to IHRM

  • Cross-cultural management

  
• Diversity as an Organizational and HR Challenge in MNE
• Human Resource Management (HRM)

  Involves all management decisions and practices that directly affect the people who work for the organization

  
• "Human"


  Dimension of HRM relating to the soft aspects such as commitment of employees through participation and the most important assets being the employees
• "Resource"


  Dimension of HRM relating to the hard aspects such as the strategy link of HRM and the importance of efficient utilization of employees

  
• "Management"


  Role of HRM as part of management that implies it's not only an administrative function that carries out the formulated policies but also a managerial function that contributes to strategy formulation

  
• Major Functions and Activities of the General Field of HR

  • Planning for Organizations, Jobs, and People
  • Building and Motivating Performance
  • Maintaining Human Resources

  
• Strategic Decisions and their Implications for Human Resource Management


  • Types of employees

  
• Host Country National (HCN)

  Belongs to the Country where the subsidiary is located
• Parent Country National (PCN)

  Belongs to the Country where the firm has its headquarters
• Third Country Nationals (TCN)

  Belongs to any other country and is employed by the firm
• Expatriate


  An employee who is working and temporarily residing in a foreign country
• Global flow of HR creates more complexity in activities and more involvement in employees' lives
• The Expatriate Problem


  • High Expatriate Failure Rates
  • Average cost per failure to the parent firm can be as high as three times the expatriate's annual domestic salary plus the cost of relocation
  • Between 16% & 40% of all American employees sent abroad to developed nations, and almost 70% sent to less developed nations return home early
• Reasons for Expatriate Failure

  • Inability of spouse to adjust
  • Manager's inability to adjust
  • Other family problems
  • Manager's personal or emotional maturity
  • Inability to cope with larger overseas responsibility
  • Lack of technical competence
  • Difficulties with new environment
• Differences between Domestic HRM and IHRM

  • More HR activities: taxation, culture orientation, administrative services
  • The need for a broader perspective: cater to multiple needs
  • More involvement in employees' personal lives: adjustment, spouses, children
  • Changes in emphasis as the workforce mix of expatriates and locals varies: fairness
  • Risk exposure: expatriate failure, terrorism
  • Broader external influences: government regulations, ways of conduct

  
• Variables that Moderate Differences between Domestic HR and IHRM

  • Complexity involved in operating in different countries, varied nationalities of employees
  • The different Cultural Environment
  • The industry or industries with which the MNC is involved
  • Attitudes of Senior Management
  • Extent of reliance of MNC on home country domestic market

  
• Forces for Change


  • Global competition
  • Growth in mergers, acquisitions and alliances
  • Organization restructuring
  • Advances in technology and telecommunication
• Impacts on Multinational Management

  • Need for flexibility
  • Local responsiveness
  • Knowledge sharing
  • Transfer of competence

  
• Managerial Responses


  • Developing a global "mindset"
  • More weighting on informal control mechanisms
  • Fostering horizontal communication
  • Using cross-border and virtual teams
  • Using international assignments

  
• Factors that Influence the Global Work Environment

  • Cultural differences
  • Organizational structure
  • Degree of centralization
  • Extent of standardization
  • Degree of formalization
• Approaches to International Human Resource Management

  • Ethnocentric
  • Polycentric
  • Geocentric
• Large corporations prefer consistent worldwide systems, while smaller companies desire more professional systems
• Need to follow local HRM laws and develop unique techniques and practices to suit local cultural and legal requirements
• Factors that Influence the Choice of Approach to IHRM

  • Corporate International Strategy
  • Political and Legal Concerns
  • Level of Development in Foreign Locations
  • Technology and the Nature of the Product
  • Organizational Life Cycle
  • Cultural Differences