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Human Resource Management (HRM) is set of organizational activities aimed at effectively managing

and directing human resources/labour 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 achieve competitive advantage over
competitors at national and international level. 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) and it involves managing 03 types of employees namely,

Home country employees- Employees belonging to home country of the firm where the corporate head
quarter is situated.

Host country employees- Employees belonging to the nation in which the subsidiary is situated.

Third country employees- These are the employees who are not from home country/host country but
are employed at subsidiary or corporate head quarters. As an example a American MNC which has a
subsidiary at India may employ a French person as the CEO to the subsidiary. The Frenchman employed
is a third country employee.

Differences between domestic HRM and International HRM (IHRM) are summarized below:

Domestic HRM is done at national level and IHRM is done at international level.

Domestic HRM is concerned with managing employees belonging to one nation and IHRM is concerned
with managing employees belonging to many nations (Home country, host country and third country
employees)

Domestic HRM is concerned with managing limited number of HRM activities at national level and IHRM
has concerned with managing additional activities such as expatriate management.

Domestic HRM is less complicated due to less influence from the external environment. IHRM is very
complicated as it is affected heavily by external factors such as cultural distance and institutional factors.

Reviewing the Functions of Global Human Resource Management


The functions of global human resource management must be customizable depending on the
geographical area of operations, corporate culture, or other parameters. Strategies must aid in the
formation of guidelines for HR functions to be performed.

Employment

There are 5 main functions of global human resource management. These are:

Staffing

Salaries and other rewards

Training and development

Administration

Employee Relations

When operations of a company become globalized, the parameters of these functions expand. They are
driven by efficiency, information exchange, international legal provisions, convergence of business
processes, experience in internationalization and adapting the company’s HRM policies to local
conditions.

Globalizing the Functions

Staffing and Recruitment

Recruitment for international operations requires a thorough understanding of the business processes
involved in that part of the globe and the skills required to operate them. These must then be matched
to available local talents and skills; your recruitment policies have to be amended to fit these criteria.
Each area may require a separate evaluation as educational levels may vary. Requirements for physical
standards may also change, and this factor may have to be considered while recruitment is being done.

Salaries and Compensation Packages

While fixing up offer packages, care has to be taken to see that local standards are maintained while at
the same time overall organizational requirements are also met. Local laws regarding minimum wages,
bonuses and other benefits have also to be structured in to the packages. Insurance, pension and such
benefits should be reviewed as they relate to the present policies of the company.

Training and Development of Staff

Local facilities for training and development of staff need to be kept in view. If these are not adequate,
sending staff to other countries may need to be looked at, and the additional cost and benefits of such
training need to be carefully studied. Possibilities of developing in-house training should be examined to
reduce costs.
Administration of Personnel

Working conditions may vary in each area of international operations. Administration of HR and related
matters remain intrinsic in the decision-making process. Working hours must follow minimum local laws
and the start or end times of work may have to match with international operations in certain important
functions.

Human Relations

When considering global human resource management, each area of international operations may need
to comply with certain religious and national festivals.

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