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International Human Resource

Management
Managing people in a multinational context

Preeti Bhaskar
Symbiosis Center for Management Studies, Noida

Chapter Outline
Meaning and scope
Globalization
Dimensions of IHRM
Objectives of IHRM
Difference between domestic HRM and IHRM
International assignments
Significance of IHRM in International Business
Challenges of IHRM

HRM
practices
in
different
countries.
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Why organizations expand Internationally


To capture enhanced market opportunities that
foreign countries may present.

To achieve
economies of Imperative
scale in y production &
International
administration by expanding scope & volume of operations to
international markets.

Keeping up with industry leaders may require


organization enter foreign markets.

Acquiring ownership of foreign-based organization or


subsidiary
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International Expansion
Strategies for expanding internationally
Exporting
locally produced goods
to other country
International
Expansion
Subcontracting or licensing production of certain
goods or services to foreign partner
Entering into joint venture with foreign partner
Setting up operations (making a direct investment) in
form of foreign branch or subsidiary

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Chapter
2005
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Globalizing the HR - Function


As companies Globalize, their HR departments need to understand the
challenges of working internationally and serving a global organization
like:
Supporting personnel to serve the needs of their global organizations.
Acquiring competent personnel to work in a Global Environment.

Train or explain alliance about and be a better global business partner.


Administration and use supplement the capabilities for existing professionals.
Frame and Practice HR polices that adopt multinational Cultural, Political, Legal and
Industrial framework.
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International Human Resource


Management (IHRM)
The process of procuring, allocating and effectively
utilizing human resources in an international business is
called International Human Resource Management or
IHRM.

International Human Resource Management is the


process of sourcing, allocating and effectively utilizing
human resources in a multinational organization.

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Difference between
Domestic Vs. International HRM
More HR activities

Need for broader perspectives

More involvement in employee personal lives


Changes in emphasis as the workforce mix of expatriate and local
people
Risk exposure

Broader external influence

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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
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The practice of HRM in the international context is different


from its domestic counterpart in a number of ways.
These include:

Being responsible for a greater number of functions and


activities such as selection, training and management of
international assignees
much broader knowledge of foreign country employment
Dimensions ofdesigns.
IHRM
laws and global organization
more closely involved with employees lives as the
Being involved with greatly expanded and constantly
changing mix of employees (from the home countries and
foreign locals), adding considerable diversity and
complexity to the HR tasks.

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Cope up with more external influences


Face greater exposure to problems and liabilities (for
example, making mistakes in expatriate assignments can
cost). The accumulated direct and indirect costs can be
huge.
Additional responsibilities like translation of language,
both at headquarters and at the subsidiary level,
organizing schooling and housing for expatriates and
providing administrative services.
Management of differential compensation due to variety
of allowances and adjustments.
More emphasis on activities like international relocation
and orientation, both pre departure and post departure
cultural training.

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Knowledge of international taxation, rate of inflation and


cost of living, including currency fluctuation.
Diversity management, like managing people from
different cultural and political backgrounds and gender
differences.
More contacts with Government officials for obtaining
visas, work permits, tax certificates, fixing of meetings
and so on.
More risk management as threats from terrorists,
Kidnappers and protecting intellectual property rights of
firms..
More public relations work to enhance the multinationals
image and deal with human rights and other NGOs and
interest group operating in different countries.

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Dimensions of IHRM

Sources of labor,
finance and other
inputs

Where the firm


headquarter is
located

Where subsidiary
may be located

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Sources of Employees for


International Assignments
HCN

PCN

TCN

Host Country
Nationals (HCNs)
are workers
from the local
population
(local nationals)

Parent Country
Nationals (PCNs)
are employees
sent from the
home country
(expatriates)

Third Country
Nationals (TCNs)
are employees
from
a country other
than the parent &
host countries

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Issues in IHRM

Deployment in getting right skills to right place in organization


regardless of geographic location
Knowledge & innovation dissemination & transfer where all
business units concurrently receive & provide information
Talent identification & development of those employees with
abilities & skills to function effectively in global organization
Managing International Assignment
Employee and family adjustment
Selecting the right person for a foreign assignment
Culture differences
language and communication
Worldwide environment variation

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Significance of IHRM in International Business:


Scullion (2001) outlined 10 major significance of IHRM in
globally business environment. This significance can categorized
in 5 key areas:
CHALLENGE

COMMITMENT

COST
EFFECIVENESS

COMPETENCE

CONGRUENCE
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CHALLENGE:
Rapid growth of internalization and global competition has increased the nos. and
significances of MNCs resulting in the increased mobility of human resources.
Increasing no. of strategic alliances and cross border mergers and acquisitions has
increased the strategic implementation of IHRM as Global business.

COMMITMENT

.
World wide recognition of management of human resources in

international business and cross cultural management.


Business Networks and Horizontal communication and HR plays a vital
role.
COST
EFFECIVENESS .
The performance of expatriates. (poor performance of expatriate may

affect the market share and damage to foreign relations)


ChapterImportance
1
IHRM
Growing
of Expatriates in International Business.
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COMPETENCE:
Global Strategy Implementation.
Success or failure of international business based on effectiveness of management of
HR.

CONGRUENCE:

Learning, knowledge acquisitions have been identified as important potential sources


of comp. advantages for MNCs. This has also enhanced the role of IHRM to meet the
key strategic challenge of objectives.
Knowledge management is an important source of comp. advantage for MNCs, where
IHRMChapter
is the key
IHRM
1 partner and plays a central role.
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Reading 14.1

Global Workforce:
Strategies Managing
for managing
global workforce
Challenges & Strategies

Develop a careers for employees to provide rich contextual


knowledge of environments & cultures
Provide specific awareness building assignments that develop
cross-sensitivity in high potential employees in short time
Utilize expert SWAT teams deployed on short-term basis for
operational problems technical projects
Adopt virtual solutions by using electronic communication
technologies to connect local employees to distant problems
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Reasons for International


Assignments
Position filling
Skills gap, launch of new endeavor, technology
Transfer

Strategic HR Issues in
For development
International Assignments
Reasons
Management
Global
Assignments
Training and development purposes, assisting in
developing common corporate values
Organizational development
Need for control, transfer of knowledge,
competence, procedures and practices
v

Copyright 2005 South-Western. All rights reserved. 119

Types
ofInternational
International
Assignments
Types of
Assignments
Short term: up to 3 months
Troubleshooting
Project supervision
A stopgap until a permanent arrangement is found

Extended: up to 1 year
May involve similar activities as short-term assignments

Long term: varies from 1 to 5 years


The traditional expatriate assignment
v

Non-standard Assignments

Commuter assignments
Rotational assignments
Non-standard Assignments
Contractual assignments
Virtual assignments

Some of these arrangements assist in overcoming the high cost of


international assignments but are not always effective substitutes for
the traditional expatriate assignment.

Strategic management of global


assignments
1. Establish specific purpose for assignment
2. Select appropriate employee for assignment
3. Organizational & individual purposes for assignment must be
identified & matched
4. Assess adaptability to host culture of both employee & any
family members who will be accompanying employee
5. Provide appropriate training for employee & family members
6. Simultaneous training should be conducted for headquarters
staff

Strategic HR Issues in
Global Assignments

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