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The IHRM may be defined as the interplay between the three important dimensions of human resource management- types of employees, human resource activities and the country of operation. IHRM is the process of procuring, allocating and effectively utilizing human resources in a multinational corporations
UNDERSTANDING A FEW TERMS Type of Employees in Multi National Companies HCN, PCN, and TCN HCN (Host Country National) IBM employs Indian Citizens in Indian Operations PCN (Parent Country National) IBM sends US citizen to India on assignment TCN (Third Country National) IBM sends Singaporean employee on assignment to
IHRM STRATEGIESEthnocentric Approach Staffing the key positions with PCNs Generally common at the initial stage of internationalization Lack of qualified HCNs Limits the opportunities for HCNs and hence more turn over Compensation variation between PCN and HCN and hence low morale of HCNsPolycentric Approach HCNs are recruited to manage subsidiaries in their own countries and PCN in corporate HQs Avoids adjustment problems of expatriate Employment of HCN is less expensive Some of the disadvantages of Ethnocentric are overcome
Geocentric Approach Utilisation of best people for the key jobs throughout the organisation regardless of nationality Availability of competent persons throughout the organisation Organisations able to deliver high performanceRegiocentric Approach Modification of Geocentric approach Staffing is on regional approach It helps the organisations to move from ethno/polycentric to geocentric Opportunities are limited to regional level only
Stages of Moving TowardsGlobal Business Network Subsidiary Foreign Production Sale SubsidiaryExporting Licensing Subcontracting
Path to Global StatusExporting Exporting is Initial stage. Generally handled by intermediary. Appointing for a export manager-A PCN. Could be marketing department function. HR functions are similar to domestic HRM.Sales Subsidiary Direct sales with establishment with branch offices in foreign market. Development of expertise, agents and distributors in foreign market. Strategy option PCN versus HCN HR activities depends on PCN or HCN
Path to Global StatusInternational Division Transition stage before establishing foreign production facility / JV with local firm / Acquisition of local firm. Establishing Subsidiary in foreign country. Shift from PCN to HCN. Separate HR manager from HR function to look after expat management for the same.Global Production Firm’s growth leads to foreign production. Global competition , flow of information, technology. Adaptation of HRM activities for host countries. Results in balanced control/ Decentralization of strategic planning/formulating / Implementing HR strategies.