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International Human

Resource Management
(IHRM) and Labor Relations
Jayadeva de Silva.M.Sc,, FIPM, FITD
Strategic Signifcance of IHRM
The international HRM process involves understanding the
strategic context of HRM within the frms overall strategy,
recruiting and selecting appropriate managerial personnel,
providing necessary training and development, assessing
performance, providing compensation, and evaluating
managerial retention and turnover.
What are the complications for IHRM compared to
International HR managers face a more complex tas than
their domestic counterparts !ecause
o di"ering cultures,
o levels of economic development, and
o legal systems among countries
These may re#uire companies to adapt their hiring, fring,
training, and compensation programs to each country.
o $irms must decide whether managers will !e selected
from the home country, from the host country or from
third countries.
o Training and development in an international frm may !e
more complex than in a domestic frm.
o %ompensation systems must !e adapted to meet the
needs of each countrys la!or maret.
IHRM Emploee Issues
There are two !road categories of &mployee facing
international human resource managers'
()* recruiting, training, and retaining managerial and
executive employees+ and
(,* recruiting, training, and retaining non managerial
employees such as !lue-collar production worers and
white-collar o"ice sta".
!" # $ompensation for non e%ecuti&es
o $or non managerial employees, international frms
normally adapt their compensation and performance
appraisal systems to local laws, customs, and cultures.
for example,
o ../. worers appreciate feed!ac from an appraisal
o 0erman worers are resentful of feed!ac.
'pe of (ecision Ma)ing
o $irms that centrali1e decision maing at head#uarters
typically favor home-country managers while frms that
decentrali1e decision maing to the su!sidiary level often
employ host country nationals.
o /ince most companies do not fall at one extreme or the
other, most companies have a com!ination of !oth home
and host country managers.
o Managers can !e hired from three groups' parent
country nationals+ host country nationals+ and third
country nationals.
o !arent countr nationals (!$*s) are residents of
the international !usinesss home country who are
transferred to one of its foreign operations.

Wh !$*S
o %ommunications and coordination with corporate
head#uarters is typically facilitated when 2%3s are
employed !ecause they normally share a common
culture and education !acground with head#uarters
Issues +ith !$*s
o 2%3s may however, lac nowledge of local laws,
culture, economic conditions, social structure, and
political processes.
o Moreover, they may !e expensive to relocate and
maintain the host country.
o In addition, !ecause a host country may impose
restrictions on the num!er of employees that can !e
transferred, a company may not have the freedom to
hire whom it wants.
o Host countr nationals (H$*s) are residents of the
host country, and are the most common choice for mid-
level and lower-level 4o!s.
o &mploying H%3s is popular !ecause they are already
familiar with local laws, culture, and economic
Wh H$*s
o 5lso, H%3s may !e cheaper than 2%3s !ecause a frm
can avoid the costs such as relocation expenses that
are associated with 2%3s.
o However, an H%3 may not !e familiar with the frms
corporate culture nor its !usiness practices.
o 'hird countr nationals ('$*s) are citi1ens of
neither the frms home country nor of the host
o T%3s are most liely to employed in upper-level or
technical positions. T%3s and 2%3s are collectively
nown as e%patriates (people woring and residing in
countries other than their native country*.
Ethnocentric Model
o 5n ethnocentric sta,ing model may !e used to help
a frm choose among H%3s, 2%3s, and T%3s for
various positions.
o The model indicates that 2%3s sta" most higher-level
!ol $entric # -eocentric Models
o 6ther frms may follow a polcentric sta,ing model
where, !ased upon the !elief that H%3s now the local
maret !est, the use of H%3s is high.
o $inally, frms that want to hire the most #ualifed
person for the 4o!, regardless of the individuals
nationality, follow the geocentric sta,ing model.
S)ills # "bilities Re.uired b IHR Managers
The sills and a!ilities needed !y international managers
fall into two general categories'
o those needed to do the 4o! and
o those needed to wor in a foreign location.
Issue of 'alents
o Today, as !usinesses glo!ali1e, the maret for
executive talent is also glo!ali1ing.
o Top management teams are increasingly diverse in
their mem!ers.
o 7hile most M3%s do not hire new college graduates to
tae foreign positions immediately, many hire
graduates with the intention of sending them a!road in
the future.
E%patriate /ailure
o The selection process in international frms is
particularly important !ecause of the high cost of
expatriate failure.
o E%patriate failure is the early return of an expatriate
manager to his or her country !ecause of an ina!ility
to perform in the overseas assignment.
o The cost of expatriate failure ranges !etween 89:,:::-
o &xpatriate failure rates may !e as high as ,:-;:
percent in many ../. companies, higher than for either
&uropean or <apanese companies.
What is 0$ulture Shoc)1?
o Managers sent on foreign assignments may experience
culture shoc), a psychological phenomenon that may
lead to feelings of fear, helplessness, irrita!ility, and
o 5cculturation typically proceeds through four phases.
What should be done ?
=ecause an expatriate su"ering from culture shoc may
!e less e"ective and productive, companies typically tae
measures to limit its e"ects such as providing pre-
departure language and cultural training.
Western &s2 *on3Western 4alues Western &s2 *on3Western 4alues
Western &s2 *on3Western 4alues Western &s2 *on3Western 4alues
Internal self-control
Respect for results
Respect competence
Time is money
%ollectivism> group
&xternal control
/aving face
Respect for status
Respect elders
Time is life
Wor) -oals
Wor) goals -erman 5apan
Interesting wor ? , )
0ood pay ) ; ,
0ood interpersonal
relations 9 @ A
0ood 4o! security , 9 ?
5 good match !etween you
and your 4o! ; ) 9
5 lot of autonomy B ? B
6pportunity to learn C A ;
5 lot variety @ C @
%onvenient wor hours @ B C
0ood physical woring
responsibility &
Agreements & contracts
The way and style
information is shared
Extent to which uncertainty
creates discomfort
Whether individual or
group takes precedence
The view of and
way time is used
Extent to which
power is distributed
Critical Cultural Variables
conditions )) ): ))
2romotion ): )) ):
!hases in "cculturation
Honemoon78 (isillusionment78"daptation78
(i,iculties in adapting
In most cases, expatriates fail to complete their foreign
assignments !ecause of an ina!ility of the expatriate
manager, or his or her spouse and family, to adapt to the
new location.
What is Repatriation?
o $irms are now !eginning to pay more attention to
repatriation--!ringing a manager !ac home after a
foreign assignment has !een completed.
o Individuals that successfully adapted to the foreign
environment may experience culture shoc upon
returning to their own country.
*on cultural Issues
Regarding Dnon-culturalE issues leading to success or
failure overseas, managers tend to !e more successful in
foreign assignments when ; conditions are met'
). they can freely decide whether or not to accept a
foreign assignment
,. they have a realistic understanding of the new 4o!
and assignment
?. they have a realistic expectation of a repatriation
9. they have a mentor in the parent frm who will loo
out for their careers
;. there is a clear lin !etween the foreign assignment
and the managers long-term career path.

Issues of $ompensation
%ompensating expatriate managers can !e a complex
process !ecause factors such as di"erences in currency
valuation, standards of living, lifestyle norms, and so forth
must !e taen into consideration.
o 5 cost3of3li&ing allowance may !e given to managers
to o"set di"erences in the cost-of-living in the home
and host countries.
o 5 hardship premium (also nown as a foreign
ser&ice premium* may !e paid to mangers who
accept assignments in relatively unattractive locations.
Special benefts
o /pecial !enefts pacages that may !e provided to
expatriate managers include housing, education,
medical treatment, travel to the home country, and
clu! mem!erships.
$omparison +ith locals:
o In many cases the total compensation pacage o"ered
to an expatriate is much more lucrative than the
pacage o"ered to his or her local counterpart.
*ot to ta)e anthing for granted
The simplest and most useful advice for those considering
an overseas assignment is to carefully weigh the !ip side"
of all the issues #ust mentioned, from your perspective.
$nd, to not ta%e anything for granted a&out how conditions
will &e when you arrive 'doing one(s homewor% pays).
What do ou mean b Labor Relations?
2rocess through which management and worers
identify and determine the 4o! relations that will
!e in e"ect at the worplace
/pecifc approaches to la!or relations varies from
one country to another
Labor Relations in ;ther $ountries
../. 5pproach to Fa!or Relations
%ollective !argaining
2rocess where!y formal la!or agreements
are reached !y union and management
Involves negotiation of wages, hours, and
conditions of employment and the
administration of the la!or contract
.nions and management have !een
cooperative in the past
Fa!or harmony not adversely a"ected !y
unifcation of &ast and 7est
.nion power is still #uite strong
Rights of worers addressed more carefully
!y management
.nions and management have cooperative
%ontracts tend to !e general and vague
Gisputes regarding the la!or contract
usually settled amica!ly
.nions most active during the spring and
end of the year

/actors ",ecting Labor Relations
o 5 countrys laws, culture, social structure, and
economic conditions may impact la!or relations. for
example that the role of unions varies greatly among
o In the ../. mem!ership in unions has !een steadily
decreasing, !ut over half the worlds worforce outside
the ../. !elong to unions.
E6 # 5apan
o .nions in the &uropean countries tend to !e aligned
with political parties, !ut in <apan are created and run
!y the frms themselves.
o In fact, la!or relations in <apan are so cordial that
stries are rare.
Industrial (emocrac # $odetermination
o The premise of industrial democrac--the !elief that
worers should have a voice in how !usinesses are
run--is an important inHuence in la!or unions in
o In fact, in 0ermany an approach called
codetermination provides for cooperation !etween
management and la!or in running a !usiness.
Social $harter
o The &.s implementation of its social charter (or
social polic* where!y employment conditions and
practices will !e standardi1ed throughout the
community is addressing issues such as maternity
leave, 4o! training, and pension !enefts.
o $inally, la!or unions have had their !argaining power
reduced !y glo!ali1ation.
o However, there is very little coordination !etween
unions in di"erent countries to counter that reduction
in !argaining power.
(emographic $hallenges for IHRM
Educational attainment of +or)ers
o Higher education levels coupled with high literacy
o Implications' productivity, safety
"ging +or)force
o 0rowing I of worforce is in higher age categories
o Implications' retirement, 4o! design, re-training,
!enefts, wor schedules, etc.
More part3time and contingent +or)ers
o 5ccounts for a!out );I of all employment
o Implications' more Hexi!ility for organi1ations !ut
raises issues of pay ine#uity, reduced employee loyalty
$ultural (4alues) $hallenges for IHRM
"ttitudes to+ard +or)
o Gi"erent expectations re' wor and leisure
o 2eople want more Hexi!ility, holiday time, etc.
Ethnic di&ersit
o Immigration from numerous countries
o 2otential for conHicts of values, etc. !ut also
opportunity to learn, expand
"ttitudes to+ard go&ernment
o 3egative attitudes toward those in power J e"ects
employment relationships
Legal $hallenges
o 3umerous laws inHuence organi1ational (and HR*
o &mployment e#uity
o Human rights laws
o %harter of rights and freedoms
o /afety legislation
Managing (i&ersit
o Giversity
o The di"erences among people
o 2rotected-0roup %oncerns
o 2erceived hostile organi1ational cultures
o /tereotyping
"ge Issues and (i&ersit Management
o <o! 6pportunities for 6lder 7orers
o Giscrimination against Dover#ualifedE older employees
in hiring
o Instances of age discrimination in the worforce
reduction when layo"s impact largely older worers
o 6lder 7orers =eneft 2rotection 5ct (67=25-./5* of
)CC: and e#ual treatment of older worers
o 5ttracting, retaining, and managing older worers
Se% (iscrimination in 5obs and $areers
o 3epotism -The practice of allowing relatives to wor for
the same employer.
o <o! 5ssignments and D3ontraditionalE <o!s -7omen are
increasingly entering 4o!s traditionally occupied only !y
o The D0lass %eilingE -Giscriminatory practices that have
prevented women and other protected-class mem!ers
from advancing to executive-level 4o!s.
o D0lass 7allsE and D0lass &levatorE
The tendency for women to advance only in a limited
num!er of functional felds within an organi1ation.
What should be done for 9rea)ing the -lass
o &sta!lishing mentoring programs
o 2roviding career rotation
o Increasing top management and !oardroom diversity
o &sta!lishing goals for diversity
o 5llowing for alternative wor arrangements
o Giversity training-5gainst stereotyping

Se%ual Harassment and Wor)place Relationships
o Types of sexual harassment
o Kuid pro #uo means Fining employment outcomes to
the harassed individuals granting of sexual favors.
o Hostile environment means 5llowing intimidating or
o"ensive woring conditions to unreasona!ly a"ect an
individuals performance or psychological well-!eing.
o Fegal /tandards on /exual Harassment
o Tangi!le employment actions (e.g., termination* that
result from sexual harassment create a lia!ility for the
o 5"irmative defense for employers in dealing with
sexual harassment incidents includes'
o &sta!lishing a sexual harassment policy
o %ommunicating the policy regularly
o Training employees to avoid sexual harassment
o Investigating and taing actions when complaints arise
International Labour Relations # 'rade 6nions
Gefnition of Trade union
6ne of the frst and earliest defnition on trade unions was
that of /idney and =eatrice 7e!! who descri!ed trade
unions as'
D..5 continuous association of wage earners for the
purpose of maintaining or improving their woring lives.E
Wh do Wor)ers 5oin 'rade 6nions?
&conomic needs'
o /trengthen !argaining power over wages
o Improve woring conditions
o <o! security'
o 2rotect 4o!s from dismissal>retrenchments
o 2rotection from unilateral action !y management
(change terms and conditions*
/ocial 3eeds'
o %omradeship and sense of community
/ocial 7elfare'
o 5ccident, death and pension !enefts
o .nions represented on pension funds
o 2romote the development of communities
o .se investments to !eneft mem!ers
o /elf-fulflment and Gevelopment'
o Train and develop mem!ers
o 2rovide literacy sills to mem!ers
2olitical Reasons'
o 2ut pressure on repressive governments
o InHuence la!our legislation
o InHuence government policy on wealth distri!ution and
poverty alleviation
;b=ecti&es of 'rade 6nions
0oals include'
o &#uita!le wage !enefts
o &nsure a healthy and safe environment
o 2romote 4o! security and freedom from ar!itrary
o 2rovide legal and other support to mem!ers
o 2rovide political inHuence and lo!!y government
Methods 6sed b 'rade 6nions to ;btain -oals
o %ollective =argaining' 5n ongoing process with
employers, does not end with wages
o Representation' &lection of shop steward, who are full
time employees, and represent the interests of union
%ollective 5ction'
o 7orers go on strie
o %onsumer =oycott'
o lin with community to !oycott products of the
2olitical 2ower'
o InHuence the vote at elections
o Fo!!y government and other state structures
o International support'
o 0etting the support of international trade unions and
community organisations
Fegal action '
o .sing the protection provided !y la!our legislation
o Media channels'
o 2romote the view of unions
'pes of 'rade 6nions
? $orms or type of trade unions'
%raft .nions'
o &arliest forms of trade unions
o 2romote the silled status of mem!ers
o Recruit within a particular craft
o Mem!ership thru apprenticeship system
o 2ower in sill and a!ility to control entry into the
profession, i.e. control supply of sill
0eneral .nions'
o 6rganises all worers regardless of sill or industry
o 3ormally politically motivate and anti-capital
o Ideal of one union for the whole country
o More success with unsilled and !lue collar worers
o 7eaness not sectorally !ased
Industrial .nions'
o 2resently most common form of union
o 6rganises all worers in a particular industry
o 2romotes sectoral !ased collective !argaining
o /trength is in no. of mem!ers per sector
o /tronger unions due to ) industry focus
International $ederations
o 5utonomous international trade unions lining national
unions from di"erent countries'
&ducational international
International Metal 7orers $ederation
International Transport 7orers $ederation
o $ocus' &ducation, development, solidarity, strategic
;ther rele&ant issues in International labour relations
7or Fife =alance