MANAGING GLOBAL HUMAN

RESOURCES

What is IHRM
IHRM is the human resource management concepts and

techniques employers use to manage the human

resource challenges of their international operations.
IHRM generally focuses on three main topics:
Managing human resources in global companies (for
example, selecting, training, and compensating
employees who work abroad)
Managing expatriate employees (those the employer
sends abroad)
Comparing human resource management practices in
different countries

The Stages of Internationalization

Stage 2: Export Operations
Markets expand to other
countries, but production
remains domestic.

Stage 3: Subsidiaries or
Joint Ventures some
operations move out of
the home country.

Stage 1: Domestic
Operations: market
is domestic.
Stage 5: Transnational
Operations. Operations
are highly decentralized,
with each business unit
free to make decisions
with very loose control
from corp. headquarters.

Stage 4: Multinational
Operations assembly and
production facilities in
several countries. Some
decentralization of
decision making.

174

Intercountry Differences Affecting HRM

Cultural
Factors

Economic
Systems

International
Human Resource
Management

Legal and Industrial

Relations Factors

Ethics & Code of Conduct

Ethics and Codes of Conduct - Employers should have set policies on

things like discrimination, harassment, bribery, and Sarbanes-Oxley.

The SarbanesOxley Act of 2002 (Pub.L. 107204, 116 Stat. 745,
enacted July 30, 2002), also known as the "Public Company Accounting
Reform and Investor Protection Act" (in the Senate) and "Corporate and
Auditing Accountability and Responsibility Act" (in the House) and more
commonly called SarbanesOxley, Sarbox or SOX, is a United States
federal law that set new or expanded requirements for all U.S. public
company boards, management and public accounting firms. There are
also a number of provisions of the Act that also apply to privately held
companies, for example the willful destruction of evidence to impede a
Federal investigation. The bill, which contains eleven sections, was
enacted as a reaction to a number of major corporate and accounting
scandals, including Enron and WorldCom. The sections of the bill cover
responsibilities of a public corporations board of directors, adds criminal
penalties for certain misconduct, and required the Securities and
Exchange Commission to create regulations to define how public
corporations are to comply with the law.

176

HR and the Internationalization of

Business
The Global Challenges
Coordinating market, product, and production plans on a worldwide

basis.
Creating organization structures capable of balancing centralized

home-office control with adequate local autonomy.

Extending HR policies and systems to service staffing needs

abroad.

Global HR Issues
Recruitment and Selection
Socialization and Training
Performance Management

Compensation
Repatriation

Staffing Global Assignments: Home or

Local?
Types of Global Employees

Host-Country
National
(HCN)

ParentCountry
National (PCN)

Third-Country
National (TCN)

Staffing Approaches
Ethnocentric : All key positions are filled by PCNs( Americans

occupying key position of MNC in India)

Polycentric : HCNs are recruited to manage subsidiaries in their own
countries and PCNs occupy positions at corporate HQs.(Indians in
India and Americans in USA)
Global OR Geocentric: The best people are utilized for key jobs
throughout the organization (Indian occupying key position in America
for e.g Microsoft or Google)

Sanjay Jha Global Foundries. ...

Sundar Pichai Google
Ajit Jain Berkshire Hathaway Insurance. ...
Satya Nadella Microsoft
Dinesh Patiwal Harman Industries. ...
Ajay Banga MasterCard. ...
Rakesh Kapoor Reckitt Benckiser. ...
Shantanu Narayen Adobe Systems.
Indra Nooyi PepsiCo,

Types of Global Assignments

Case Study

Fred Baily

Expatriate Adjustment Stages

Source: GMAC Relocation Services, used with permission.

Figure 189

Expatriate Adjustment Stages

When executives move to new societal culture, they

go through distinct phases before they decide on

adopting it or giving it up.
The first phase is euphoria, when everything is
different and beautiful
It is followed by a cultural shock when everything
has to be learned from scratch and the expatriate
executive feels distressed because of his
predisposition to think that his home conditions are
best
This predisposition is known as self-reference
criterion or ethnocentrism

Expatriate Adjustment Stages

What is needed is cultural empathy for local culture
He also needs to be trained to be low in ethnocentrism

and to play integrative role as executive in the new culture

In the absence of such training at making an executive
trans-cultural he is likely to commit various sorts of errors
National culture also plays a role in shaping employee
attitudes toward customers and interpersonal contact

1715

Staffing the Global Organization

(continued)
Inability of Spouse
to Adjust

Personality

Personal
Intentions

Family
Pressures

Why Expatriate
Assignments
Fail

Inability to Cope
with Overseas
Responsibilities

Lack of
Cultural Skills

Overseas assignment inventory used by Brookfield Global Relocation

Services International group for >40yrs- an Online assessment
measure(9 attributes & 6 contexts for adaptability to another culture)

1716

Staffing the Global Organization

(continued)
Realistic Previews

Careful Screening

Helping Expatriate
Assignments Succeed

Improved Orientation

Cultural and Language Training

Improved Benefits Packages

Training for International assignments

Language Training

Key Elements
Needed to
Prepare
Employees to
Work Overseas

Cultural Training

Personal and
Family Life

Three Approaches to Cross-Cultural

Training
Length
of Stay

Length
of Training

Training Rigor

13 yrs

1-2 months

HIGH

2-12 months

3-4 weeks

MID-LEVEL

1 month or
less

Less than a
week

LOW

Performance Appraisal
Who Should Appraise?
Home-country evaluations
Host-country evaluations
Invalid performance criteria
not appropriate for foreign culture
Rater competence
dont understand situational factors
Rater bias
cultural misinterpretations

Overcoming Appraisal
Problems
Use multiple raters, 3600 process
Allow participation of ratee in process
Make sure that some of those raters have lived and

worked in the country in which the expatriate is working.

Have flexibility in criteria of appraisal
Have a proper appraisal feedback process

Compensation in International
Assignments
To be effective, an international compensation program

must:

Provide an incentive to leave the home country.

Allow for maintaining a home country standard of living.
Facilitate reentry into the home country.
Provide for the education of children.
Allow for maintaining relationships with family, friends, and
business associates.

International Compensation
Balance Sheet Approach
Equalizes cost differences between the international

assignment and the same assignment in the home country.

Global Market Approach

International assignments are viewed as continual and core

components of compensation and benefits are provided

regardless of assignment location.

The Balance Sheet Approach

(Assumes Base Salary of $80,000)

Incentives &
Allowances
To have expatriates accept and stay on international
assignments:
Foreign service premiums: Range from 10-30 percent over and

above base pay

Hardship allowances: Compensation for hard working conditions
Mobility premiums: Lumpsum for moving from one adssignment
to another
Non-monetary rewards: training & development

Repatriation Problems
Lack of Respect for Acquired Skills
Loss of Status
Poor Planning for Return Position

Reverse Culture Shock

* 50 percent leave within 2 years

Criticality of IHRM
Addresses a broader range of issues
Has to handle employees belonging to several

nationalities
Greater involvement of HR managers in the personal life
of employees
Greater risks involved, cost of mistake is higher
Has to manage external factors like the culture and govt.
regulations of the foreign country.