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International HRM by Caleb Joshua, MSW(HR), Bishop Heber College, Trichy.
The document discusses International Human Resource Management (IHRM), focusing on its complexity compared to domestic HRM due to cultural diversity, staffing strategies, and numerous HR functions such as recruitment, training, and performance management. It highlights challenges like expatriate failure, compensation discrepancies, and the need for cultural awareness in host countries. The role of IHRM is emphasized as crucial for the success of multinational firms in navigating the complexities of global operations.
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International HRM by Caleb Joshua, MSW(HR), Bishop Heber College, Trichy.
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- 2. Definition International human resourcemanagement is concerned with the human resource problems of multi-national firms in foreign subsidiaries with the unfolding of HR issues that are associated with the various stages of the internationalization process Boxall 1995
- 3. HR Activities • Procure • Utilise •Allocate Types of employees Countries • Home country nationals • Host country nationals • Third country nationals • Home country • Host country • Third country
- 4. IHRM COMPARED WITHDHRM However the differences between IHRM and DHRM are more striking than their similarities. The main difference stems from the complexity of operating countries, having different employees.
- 5. Factors that Differentiate More HR functions and activities Need for broader perspective More involvement in employee’s personal lives Changes in emphasis as the work force mix of expatriates and locals vary Risk exposure Broader external influences
- 6. More HR Activities Human resource planning Employee hiring Training and development Compensation Performance management Industrial relations
- 7. Human Resource Planning Difficulty in implanting HR procedures in host countries. Difficulty in tying strategic business planning to HR planning and vice versa. Providing developmental opportunities for international managers.
- 8. Employee Hiring Ascertain cultural-fitwith that of the global organization. Ethnocentric, polycentric or geocentric approaches to staffing. Selection of expatriates. Coping with expatriate failure. Managing repatriation processes. Managing female expatriates.
- 9. Training and Development Emphasis on cultural training Language training Training in global etiquette and the nuances of the virtual workplace culture
- 10. Compensation In Devising anappropriate strategy to compensate expatriates Minimizing discrepancies in pay between parent, host and third country nationals
- 11. Performance Management Constraints whileoperating in host countries need to be considered Physical distance, time differences and cost of reporting system add to the complexity Identification of raters to evaluate subsidiary performance
- 12. Industrial Relations Who shouldhandle industrial relation problems in a subsidiary ? What should be the attitude of a parent company towards the unions in a subsidiary ? What should be union tactics in Subsidiaries ?
- 13. Need for BroaderPerspective While dealing with pay issues Family Constitutional policies culture
- 14. Involvement in Employee’s personallives Its necessary for selection, training and effective management of both parentcountry and third-country nationals. The HR departments needs to ensure that the expatriate employee understands housing arrangements, health care, and all aspects of remuneration provided for the foreign assignments. In most companies there are separate ‘International Human Resource Service’ for this purpose to handle banking, investments, rentals and repatriation.
- 15. Risk Exposure In IHRMthere are many risks that are terrorism, kidnapping and murders. There is the risk of expatriate failure. The failure of an expatriate can have disastrous results. There are also personal setbacks for employees who fail even though they had been viewed as competent managers within the domestic organizations.
- 16. External Influences Policy actions of national governments, suchas expropriation and changes in exchange rated. Responses of competitors in the host market, and Host country stipulations on staff selection.
- 17. Growing interest inIHRM Globalization of business leading to mobilization of resources. Effective management of human resources. To minimize the risk of underperformance or failure in overseas assignments. Implementation of international strategies by competent managerial personnel to man overseas assignments.
- 18. Movement from traditionalhierarchical organizational structures towards the network organization. Plays significant role in implementing and control of strategies in an international business.
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- 20. Basic Steps inIHRM Human Resource Planning Recruitment and selection Training and Development Performance Management Remuneration Repatriation Employee Relations Multi-Cultural Management
- 21. HRP Identifying top-management potentialearly. Identifying critical success factors for future international managers. Providing developmental opportunities. Tracking and maintaining commitment to individuals in international career paths. Tying strategic business planning to HRP and vice-versa. Dealing with multiple business units while attempting to achieve globally and regionally focused strategies.
- 22. Recruitment and Selection Right number of people for right type. Must not select people just with skills but also employees who can mix with the organization's culture. Should hire employees whose styles, beliefs and value systems are consistent with those of the firm.
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- 24. Ethnocentric policy Key managementpositions filled by parent country nationals Advantages: Overcomes lack of qualified managers in host nation Unified culture Helps transfer core competencies Disadvantages: Produces resentment in host country Can lead to cultural myopia
- 25. Polycentric policy Host-country nationalsmanage subsidiaries Parent company nationals hold key headquarter positions Best suited to multi-domestic businesses Advantages: Alleviates cultural myopia. Inexpensive to implement Helps transfer core competencies Disadvantages: Limits opportunity to gain experience of hostcountry nationals outside their own country. Can create gap between home-and host-country operations
- 26. Geocentric policy Seek bestpeople, regardless of nationality Best suited to Global and trans-national businesses Advantages: not always possible Enables the firm to make best use of its human resources Equips executives to work in a number of cultures Helps build strong unifying culture and informal management network Disadvantages: National immigration policies may limit implementation Expensive to implement due to training and relocation Compensation structure can be a problem.
- 27. Advantages & Disadvantagesof Using PCNs Disadvantages Advantages Familiarity with home office, goals, practices Easy organisational control & coordination International exposure to promising managers PCNs special skills & experiences Difficulty in adapting to foreign country Excessive cost of selecting, training & maintaining expatriates Promotional opportunities limited for HCNs May try to impose inappropriate HQ style Compensation differences for HCNs & PCNs Family adjustment problems
- 28. Advantages & Disadvantagesof Using HCNs Disadvantages Advantages Familiarity with the situation in host-country Lower hiring costs Locals motivated due to promotional opportunities Responds well to localisation of subsidiary’s operations No language barrier HCNs stay longer in positions Difficulty in exercising effective control over the subsidiary’s operations Communication problems with home office personnel No opportunity for home country’s nationals to gain international experience Limited career opportunity outside the subsidiary
- 29. Advantages & Disadvantagesof Using TCNs Advantages Salary & benefit requirements lower than that of PCNs May be better informed about host country environment Truly international managers Disadvantages Host country govt. may resent hiring TCNs May not return to their country after assignment Host country’s sensitivity w.r.t nationals of specific countries
- 30. Expatriate Assignment LifeCycle Determining the need for an expatriate Crisis & Adjustment Reassignment Abroad Repatriation & Adjustment Departure Selection Process Pre-assignment training Post-arrival Orientation & Training Crisis & Failure
- 31. The expatriate Problem Expatriate: another citizens of one country working in Expatriate failure: premature return of the expatriate manager to his/her home country Cost of failure is high: estimate = 3X the expatriate’s annual salary plus the cost of relocation (impacted by currency exchange rates and assignment location) Inpatriates: Expatriates who are citizens of a foreign country working in the home country of their multinational employer
- 32. Expatriate Failure Premature returnof expatriates to their home country Reasons Inability to adjust to host country culture leads to culture shock Personal & emotional problems Difficulties with the environment Inability to cope with larger international responsibilities Other family reasons
- 33. Expatriate selection Reduce expatriatefailure rates by improving selection procedures An executive’s domestic performance does not (necessarily) equate his/her overseas performance potential Employees need to be selected not solely on technical expertise but also on cross-cultural fluency
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- 35. Training & Development CrossCultural Training Language Training Practical Training Management Development & Strategy 35
- 36. HCN Training Gaining knowledge about parent organisation Technical knowledge- how specific to organisation Role of the subsidiary in the MNC General awareness of the parent country cultural norms 36
- 37. Expatriate Performance Management Linkageto organisational strategy Setting individual performance goals Identifying variables impacting performance Providing opportunities for improvement Providing regular feedback on progress towards goals Appraising the performance Linking results with rewards 37
- 38. Paying Expatriates Objectives tobe achieved Attract qualified & interested employees Facilitate movement of expatriates between subsidiaries Consistent & reasonable relationship between pay levels Cost-effective Problems Faced Discrepancies in pay between parent, host & third country nationals Vary compensation based on family situation of expat Remuneration when re-entering parent-country organisation Must accommodate changes in international business environment
- 39. Factors Influencing Compensation InternalEnvironment Goal Orientation Capacity to pay Competitive strategy Organisational culture Internal workforce composition Labour relations Subsidiary role External Environment Parent nationality Labour market characteristics Local culture Home & host country government’s role Industry type Competitor’s strategies
- 40. Repatriation The activity ofbringing the expat back to the home country Can cause re-entry shock or reverse culture shock Reasons Posting period over Children’s education Not happy with overseas assignment Failure to do a good job
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- 42. Employee Relations Delegated toforeign subsidiaries Labour relations centralised when intersubsidiary production integration is present Depends on nationality of ownership of subsidiary – compare US and Europeans When a well established firm is acquired, the autonomy is given to the Host Parent country has more control during initial stage More intervention when subsidiary is of strategic importance
- 43. Multiculturalism Culture – customs,beliefs, norms & values that guide behaviour of people in a society or passed on from one generation to the next Multiculturalism – people from many cultures (countries) interact regularly Benefits Greater creativity & innovation Sensitivity in dealing with foreign customers Possibilities of hiring best talent ‘Super organisational culture’ Universally acceptable HR policies & practices
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- 45. Books and lectures givesu a start, experience and endurance gives u wisdom but how u act is what u have Understood - Caleb Joshua THANK YOU