1. MODULE 1
AGENDA
-Cultural, Comparative and Organisational Perspectives on IHRM :
Emergence of Global HR Manager
-Approaches to International Human Resource Management
-Review of IHRM approaches
-IHRM models approach to other contexts
2. DEFINE IHRM
IHRM is the process of managing people across
international boundaries, and includes the full
range of activities involved in the recruitment,
selection, development, and retention of
employees in a global environment. –
International Labour Organization (ILO)
3. WHAT IS IHRM
International human resource management is the process of employing,
training and developing and compensating the employees in
international and global organizations.
An international company is one which has subsidiaries outside the
home-county which rely on the business expertise or manufacturing
capabilities of the parent company. Generally, an MNC is considered to
have a number of businesses in different countries but managed as a
whole from the headquarters, located in one country.
International HRM deals with the typical HRM functions like
recruitment, selection, training and development, performance
appraisal, etc., at the international level.
4. Managing People across boundaries
Integration
Flexible
eg: P and G
IBM
EXTENSIVE International exposure
5. TYPES OF EMPLOYEES
1.Parent-Country Nationals (PCNs) – Employees belonging to
the country where a company’s headquarters are located are
called as parent-country nationals or home country
nationals.
2. Host-Country Nationals (HCNs) – Employees belonging to
country where the company has set up a subsidiary or a
manufacturing facility are called host- country nationals.
3. Third-Country Nationals (TCNs) – Employees who work in
the home or host country facility of the company but are not
nationals of either are called third- country nationals.
6. TYPES OF COUNTRIES
HOME COUNTRY – country of origin of the firm.
HOST COUNTRY – country in which operations of the
firm are carried on.
THIRD COUNTRY – Human or Other Resources are
Procured.
7. NEED OF IHRM
1. CULTURAL DIVERSITY
Individualism and Collectivism
USA, Great Britain, Australia, Canada, Netherlands, and New Zealand.
Japan, Columbia, Pakistan, Singapore, Venezuela, and Philippines.
Power Orientation
Uncertainity Avoidance
Mascilinity and Famininity
In societies having masculinity characteristics, more emphasis is placed on ego
goals such as career, money, etc., while in societies having femininity
characteristics, more emphasis is placed on social goals such as relationships,
helping others, etc.
8. 2. WORKFORCE DIVERSITY
Expatriate - a parent country national sent on a long-term assignment to the host
country operations.
Inpatriate - a host country national or third country national assigned to the home
country of the company where it is headquartered.
Repatriate - an expatriate coming back to the home country at the end of a foreign
assignment.
3. LANGUAGE
4. ECONOMIC
10. ETHNOCENTRIC APPROACH
In Ethnocentric approach, management believes that the approach of the parent
company in managing things is the tried and tested practice and it should be
followed in all units of the organization in different countries.
This leads to the adoption of all systems, procedures, policies of the parent
company from the parent country in all other centres of activities.
This may lead to conflicts in certain circumstances. When a company operates in
different countries, the expectations and norms may vary from country to country.
Industrial unrest due to this mismatch of expectations and believes is quite
common. In India agitations in Maruti, Honda etc in the recent past were examples
of this approach.
In ethnocentric approach, most of the major decision making is centralised with
the parent company. This is more in the case of management of Human Resources.
The top management in host countries is also posted from the parent company so
that the culture of the unit remains in line with the parent country.
Example : the ethnocentric approach are Japanese firms such as Panasonic, Sony and
Hitachi.
11. POLY-CENTRIC APPROACH
In Poly-centric approach or philosophy, MNCs realize the importance of the
host country and its governing laws. Further, they are aware that the National
culture plays an important role in all aspects of management.
Hence it is prudent to follow the market needs of the host country and frame
a strategy which can give the best results.
In this approach, organizations have local people are recruited at senior
positions. There are very few Parent country nationals. T
The decision making is highly decentralised and local management takes all
decisions. Apart from broad policies which are framed by the corporate at
Parent country, all operational policies are decided at a local level.
In case of Management of Human Resources as well, the policies including
compensation are decided locally.
Example : McDonald's is a prominent example of a firm following polycentric
approach. Having originated in USA, its menu in USA is centered around their
local preference which is beef and meat.
12. REGIO – CENTRIC APPROACH
In Regio-Centric approach, MNCs believe that though there is a difference in
various aspects of culture from country to country yet there are similarities in a
particular region.
For example, there may be differences in the cultures of India, Sri Lanka, Japan
yet there are lot of similarities hence it may be appropriate that one Region is
managed by one regional office. Thus MNCs set up regional offices to manage
entire region consisting of all countries in this region.
They may classify Regions according to their business and presence in particular
regions. Some companies may have Asia as a region while some other MNC may
have the Asia Pacific as one region. There are various MNCs who now prefer to
have a Regional Office of the Asia Pacific region or Asia region in India.
Such organisations are strong in innovation and creativity due to diversity in their
workforce. Simultaneously such MNCs are able to channelise innovative practices
across the globe in a significant manner.
Example : customers in North America may have different taste preferences than
customers in the post-Soviet countries. In this sense, for example Coca-Cola and
Pepsi are regiocentric companies. Regiocentric strategy assumes that all countries of
the region can be regarded as a single market.
13. GEO-CENTRIC APPROACH
Geocentric approach of management believes in using the best strength wherever
it is available within the organization without any consideration of geographical
region or country.
Such organisations are very matured in their management structure, processes and
systems.
The decision making processes in such organisations give weightage to local issues
and concerns without deviating from the core value system of the organisation.
In these companies mobility of talent is frequent. Top positions are manned by
people from any country. Professionalism is the diving force and equal opportunity
irrespective of race, cast, religion, nationality, gender etc is one of their strong
core values.
Geocentric approach is highly professional hence need very competent leaders at
the top. Their training and coaching is given high importance by such companies.
Generally, such companies believe and follow ‘homegrown talent strategy. They
spend huge efforts in developing talent which is Culture fit.
Example : Coca-Cola has adopted a geocentric approach to managing its global
operations. The company's HRM policies are designed to ensure that its employees
have access to the best HRM practices and the most talented managers, regardless of
their location.
14. IHRM Activities
HR Planning
International Recruitment and Selection Policy
Training and Development
Expatriate Remuneration
Performance Appraisal of an Expatriate
Repatriation
15. Dowling (1999) attributed to six factors that
differentiate international from domestic
HRM:
1. Wide range of HR activities.
2. Need for a broader perspective.
3. More Involvement in personal life of the employee.
4. Responsiveness to changes in staffing requirements as
international strategy changes.
5. Higher risk exposure.
6. More external influences.
17. EMERGENCE OF GLOBAL HR MANAGERS
GLOBAL MINDSET
Knowledge of International Workforce in terms of demographics and competencies
Knowledge of Global Business and trends
KNOWLEDGE OF INTERNATIONAL BUSINESS
Knowledge of international markets and business
Alignment between business strategy and HR strategy
KNOWLEDGE OF LABOUR MARKETS
Labour and Employment markets
HR skills and training hubs
KNOWLEDGE OF LABOUR LEGISLATION
Local and National Government employee regulations and unionism
KNOWLEDGE OF MACRO SOCIETAL CHANGES
CULTURAL PERSPECTIVES
18. MATCHING MODEL
HARVARD MODEL
CONTEXTUAL MODEL
5 – P MODEL
EUROPEAN MODEL
19.
20.
21.
22.
23.
24.
25.
26.
27. Japanese culture that affects working relationship is based on ‘peace and
harmony’.Japan ranks high on pragmtaism, msculinity,uncertainty avoidance and
power distance.Japanese attach importance to loyalty, empathy and guidance of
subordinates.They mix authoritarianism and humanism at work place like family
system.Japanese prefer to co-operate and collaborate with their work
groups.They emphasize on participative management, consensus problem solving
and decision making.They avoid open expression and conflicts and shame of not
discharging one’s responsibilities.They show devotion to work, collective
responsibility and high employee productivity.
Americans are mostly individualistic.Their behavioural aspects include: risk-
taking, bold initiative, acting spontaneously, outspoken, critical thinking, logical
reasoning, clarity and frankness, confronting and threatening.
Therefore, there are wide conflicting situations in managing Americans in
Japanese firms and Japanese in Americans firms.Japanese think that americans
have no spiritual quality and little employee loyalty.
28.
29.
30. PCN advantages:
Knowledge of Firms culture and products
Loyalty
Influence at headquarters
Easier to access
Foreign Image
Groom executives for top management
International exposure to promising managers.
31. PCN disadvantages
Difficulty in adapting to foreign country
Excessive cost of selecting, training andmaintaining expatriates.
Promotional opportunities less for HCNs
Compensation difference for HCNs and PCNs
Communication problems abroad
Low productivity in early part of tenure
Family adjustment problems
32. HCN advantages
Familiar with local environment
Goodwill
Less expensive than hiring a PCN
Knows local business
Can be productive right away
Locals motivated due to promotional opportunities
No language barrier
33. HCN disadvantages
Loyalty maybe to country not company
Limited familiarity with firms own operation and culture
PCN at headquarters may lack sufficient understanding
of the subsidiary’s needs and
corporate strategy for the subsidiary may suffer as a result.
Communication problem with parent company personnel
34. TCN advantages
Knowledge of specific cultures and languages
Greater familiarity with host country culture than PCN, but loyalty will be to
the firm
Relocation costs lower that the PCNs
Salary and benefits lower than PCNs
Truly International managers
35. TCN disadvantages
May have a ulterior motive
Locals may prefer their own citizens for managerial positions
Some cross-cultural preparation may still be required
Potentially suffering from a lack of knowledge of the corporate culture
Using TCN’s to the exclusion of HCNs may create
the same problem or blocked career advancement that occurs when PCNs are
used in this manner.
