This document discusses international human resource management (IHRM). IHRM involves managing a company's human resources at an international level to achieve global objectives and gain competitive advantages. Key functions of IHRM include recruitment, selection, training, and managing expatriates across borders. IHRM is more complex than domestic HRM due to factors like cultural and regulatory differences between countries, currency exchange issues, and managing employees from various nationalities. Common challenges in IHRM include selecting the right employees for international assignments, ensuring cultural adaptation, and addressing language barriers.

2. What is 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.

3. OBJECTIVES OF IHRM
• Create a local appeal without compromising
upon the global identity.
• Generating awareness of cross cultural
sensitivities among managers globally and
hiring of staff across geographic boundaries.
• Training upon cultures and sensitivities of the
host country.

4. NEED FOR IHRM
• Managing expatriates
• Globalization has forced HRM to have
international orientation
• Effectively utilise services of people at both
the corporate office and at the foreign plants

5. FUNCTIONS OF IHRM
RECRUITMENT
SELECTION
EXPATRIATES
PERFORMANCE APPRAISAL
TRAINING AND DEVELOPMENT
COMPENSATION
WOMEN IN INTERNATIONAL BUSINESS
DUAL CAREER GROUPS
INTERNATIONAL INDUSTRIAL RELATIONS
TRADE UNIOUNS
PARTICIPATIVE MANAGEMENT

6. More HR activities
Need for a broader perspective
More involvement in employee personal lives
Risk exposure
More external influences
Characteristics of IHRM
6

7. More Human Resource Activities
7
• Difficulty in implementing HR in host
countries
• Developmental opportunities for
international managers.
Human
Resource
Planning
• Ability to mix with organisation’s culture
• Ethnocentric, polycentric or geocentric
staffing approach
• Selection of expatriates
• Managing repatriation process
Employee
Hiring
• Emphasis on cultural training
• Language training
• Training in manners & mannerisms
Training &
Development

8. 8
• Devising an appropriate strategy to compensate
expatriates
• Minimising difference in pay between parent,
host & third country nationals
• Issues relating to the re-entry of expatriates into
the home country
Compensatio
n
• Constraints while operating in host
countries need to be considered.
• Physical distance, time differences & cost of
reporting system add to the complexity.
Performance
Management
• Handling industrial relations problems in a
subsidiary.
• Attitude of parent company towards unions
in a subsidiary
Industrial
Relations

9. Pay issues
• Different countries, different currencies
• Gender based pay in Korea, Japan, Indonesia
Health insurance for employees & their families
Overtime working –
Promotions based on seniority or merit
Need for Broader Perspective
9

10. 10
• More involvement for both parent-country &
third-country nationals
• Housing arrangements
• Health care
• Remuneration packages
• Assist children left behind in boarding schools
More
Involvement
in
Employee’s
Personal
Lives
Changes in
emphasis as
the workforce
mix of
expatriates and
locals vary

11. 11
• Physical safety of the employees.
• Failure of expatriates to perform well 
financial losses to the firm
Risk
Exposur
e
• Dealing with ministers, political figures,
economic & social interest groups
• Hiring procedures dictated by host
country.
• Catch up with local ways of doing
business.
External
Influence

12. Reasons for Growing Interest in IHRM
12
Globalisation of
Business
Movement to network
organisations from
traditional hierarchical
structures
Significant role in
implementation &
control of strategies
Effective HRM
determinant of
success in
international business

13. Global Recruitment
 Home Country Nationals
 Host Country Nationals
 Third Country Nationals

14. Home-Country
National
Host-Country
National
Third-Country
National
Advantages
Greater control
of organization
Language barrier
is eliminated
The third-country
national may be
better equipped
to bring the
international
perspective to
the business
Managers gain
experience in
local markets
Possible better
understanding of
local rules and
laws
Costs associated
with hiring such
as visas may be
less expensive
than with home-
country nationals
Possible greater
understanding
and
implementation
of business
strategy
Hiring costs such
as visas are
eliminated
Cultural
understanding
Morale builder
for employees of
host country

15. Home-Country
National
Host-Country
National
Third-Country
National
Disadvantages dapting to foreign
environment may
be difficult for
manager and family,
and result in less
productivity
Host-country
manager may not
understand business
objectives as well
without proper
training
Must consider
traditional national
hostilities
Expatriate may not
have cultural
sensitivity May create a
perception of “us”
versus “them”
The host
government and/or
local business may
resent hiring a
third-country
national
Language barriers Can affect
motivation of local
workers
Cost of visa and
hiring factors
dapting to foreign
environment may
be difficult for
manager and family,
and result in less
productivity
Host-country
manager may not
understand business
objectives as well
without proper
training
Must consider
traditional national
hostilities

16. STAFFING POLICIES IN IHRM
• Ethnocentric: Here the Key management positions are
filled by the parent country individuals.
• Polycentric: In polycentric staffing policy the host
country nationals manage subsidiaries whereas the
headquarter positions are held by the parent company
nationals.
• Geocentric: In this staffing policy the best and the most
competent individuals hold key positions irrespective of
the nationalities.

17. Recruitment & Selection
14
Ethnocentric
Approach
• Key
management
positions held
by parent-
country
nationals
• Appropriate
during early
phases.
Polycentric
Approach
• Host-country
nationals hired
to manage
subsidiaries
• Parent-country
nationals
occupy key
positions at
corporate HQ.
Geocentric
Approach
• Seeks best
people for key
jobs,
irrespective
of nationality
• Underlying
principle of a
global
corporation
Regiocentric
Approach
• Variation of
staffing policy to
suit particular
geographic areas
• Provides a
'stepping stone'
for a firm wishing
to move from an
ethnocentric or
polycentric
approach to a
geocentric
approach
categories of employees can be hired – parent country nationals (PCNs), host country
nationals (HCNs) & third country nationals (TCNs)

18. Ethnocentric Approach
Advantages
 Easier
 Centralized Decision
making
 Motivation
 Transfer of tactic
Knowledge
 Unified Corporate
Culture
Disadvantages
Host country nationals feels
frustrated
Not able to understand
local culture
May loose chance for
promotion
Cost operations increase

19. Polycentric Approach
Advantages
 Better understand local
culture
 Motivation and morale
 Less expensive
 Training and operating
cost
 Less adjustment
problems
Disadvantages
 Problem of Coordination
and Control
 Overseas Experience
 Restricts Mobility
 Subsidaries may fail to
adopt organizational
culture

20. Geocentric Approach
 Advantages
 Large cadre of Global
executives
 Build a strong unifying
corporate culture
 Enhances local
responsiveness
 Transfer of Core
Competencies
 People with multicultural
experience can meet the
challenges of cultural
diversity
 Disadvantages
 Immigration laws
 Cost of Training and
relocation increase
 Pay levels tends to be
high
 Training and Development
is time consuming

21. How It Is Different from
Domestic HRM
• 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.

22. ISSUES IN IHRM
• Managing International Assignments
• Employee and Family Adjustments
• Selecting the right person for foreign
assignments
• Culture and Gauge
• Language and Communication

23. EFFECTIVE IHRM
IMPLEMENTATION
The following checklist identifies some of the critical
decisions/actions required in the formulation and
implementation of an effective IHR strategy.
1. As certain the current and intended nature of
international operations in the organisation (multi-
domestic, international, global or transnational?)
2. Determine the extent to which HR policies and
practices should be standardised or localised in
accordance with overall organisational strategy.
3. Assess the extent to which local cultural, social,
political, economic and legal factors will impinge on
any attempts to apply standard HR policies if
integration is a key factor in organisational strategy.

24. 4. Ensure a computerised database of global
human resources is used if integration is
desired.
5. Work with the senior management team to
identify the competencies required to achieve
global organisational objectives.
6. Work with national HR and line managers to
formulate IHR policies and practices in the key
areas of sourcing, development and reward
which will embed a transnational mindset in
the organisation.

25. Training And Development
Cross Culture training
Language Training

26. Performance appraisel
 Stipulate the Difficulty level
 More weightage to onsite managers appraisel
 Home site manager- background information to be
taken
 Performance criteria must be modified
 Qualitative criteria should also be considered
 Self appraisel

27. International Compensation
⚫“International compensation can be defined as the provision
of monetary and non-monetary rewards, including base
salary, benefits, perquisites, long- and short-term incentives,
valued by employees in accordance with their relative
contributions to MNCperformance.”(Fenwick,2003)
⚫Components:Basesalary,incentives,allowances&benefits

28. Objectives
⚫Attract employees who are qualified , experienced and interested in
international assignments
⚫Facilitatethemovementofexpatriate’sfromonesubsidiaryto
another,from home to subsidiary,and back from subsidiary to home.
⚫Provideaconsistent andreasonablerelationship between the pay
levelsof employees at headquarters,domestic affiliates and foreign
subsidiaries
⚫Becost effective byreducing unnecessary expenses
⚫Should be easily understood and easy to administer

29. Base Salary
⚫Amount of money that an expatriate normally receives in
his/her home country
⚫In a domestic context, base salary denotes the amount of cash
compensation serving as a benchmark for other compensation
elements (such as bonusesand benefits).
⚫Used to establishexpatriate pay
⚫Paid in home currency,local currency or combination
⚫Serves as benchmark against which bonuses & benefits are
calculated

30. Benefits
⚫constitute asubstantial portion - approx.one third of
compensation
⚫Transportability of pension plans,medical coverage &social
security coverage are very difficult to deal asnational practices
varies.
⚫ issues surround the amount & nature of the benefit package for
expatriates
⚫ Whether MNC’sshould maintain expatriates in home country benefit programs
particularly if firm does not receive tax deduction for it
⚫ Whether MNChasoption of enrolling expatriates in host country benefit programs
⚫ Whether home or host country isresponsible for the expatriates socialsecurity
benefits
⚫ Whether benefits should be subject to the requirements of home or host country

31. Allowances
SomeCommon InternationalAllowances
⚫ Foreign service premiums –most common for employees on long-term assignments
(over one year).More often paid to parent country nationals (PCNs) than to third
countrynationals(TCNs).
⚫ Hardship–in consideration of isolation,crime, natural hazards,political violence,
based on government data upon which rates can be provided byconsulting
organizations such asInternational SOS,aglobalmedical and security assistance
company.
⚫ Relocation–compensationfor costssuchastransport, storage, temporary
accommodation,purchases of appliances and vehicles,associated with moving to the
host country.
⚫ Education–forassignees’children.Thismayinvolvecompensationforlanguage
classes,books,and school fees.Home country boarding school fees mayalsobe
involvedfor assigneeswho opt not to take their children to isolated and or politically
violent locations.
⚫ Home leave –provision for the assigneeand family to return home periodically during
the length of the assignment.(Dowling et al., 1999;Stanley,2001)

32. Approaches to Expatriate Compensation
1. Home-based policy (the balance sheet
approach)
2. Host-based policy (going rate approach)
3. Local Plus approach

33. Home-based policy(the balance sheet
approach)
⚫Homecountry’ssalarystructure,Financialinducementsto home
package- Foreign hardship allowance
⚫The BalanceSheet approach preserves equity between
international assignees of the same nationality and between
assignments
⚫However,it can create disparities and inequities between PCNs,
TCNs and HCNs

34. Host-based policy(going rate
approach)
⚫ Assigneetransfers to the host country payroll and receives base and
incentive paybased on host countrycompensation practices and
regulations.
⚫ Adopting the same compensation for all countries within aparticular
region.
⚫ The host-basedapproach maybe acost-effective option to the traditional
home-basedapproach,including local plus policy components.
⚫ Difficulties can occur in repatriating assignees,if applying this approach,
becauseit integrates employees into the local host salary structure. It can
make it very difficult to move the assignees to another destination or
backto their home country
.
⚫ Another challenge with this approach can be that of defining aregion.

35. Balance Sheet
Approach
 Equity
 Ease in reputation
Market Rate
Approach
 Simplicity
 Equality with locals
 Identification with the
host country
Disadvantages
 Complexity in administration
 Disparity between expatriates
of different countries
 Rivalry for overseas assignment in a particular country
 Difficulity in repatriation
 Variation between assignmnets for the same employee
Disadvantages

36. Taxation
 T
ax Equalization
⚫Firms withhold an amount equal to the
home country tax obligation of the
expatriate, and pay all taxes in the host
country
.
⚫the employee pays no more and no less tax
while on assignment than they would have
paid had they remained in their home
country.
⚫The company bears all the actual home and
host country tax due.
⚫themost commonapproach to tax
management, used by 80%of
companies.

37. T
axProtection
⚫ Employee paysup to the amount of taxes would payon remuneration in
the home country, but could end up paying less if the host country
tax burden is lower than in the home country
.
⚫The company will reimburse the employee for anyexcess tax
resulting from higher tax rates in the host country

38. Expatriate Assignment Life Cycle
22
Determining the
need for an
expatriate
Selection
Process
Pre-assignment
training
Departure
Post-arrival
Orientation &
Training
Crisis &
Adjustment
Crisis & Failure
Repatriation &
Adjustment
Reassignment
Abroad

39. Expatriate Management

40. Expatriate Failure
23
Premature return of 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

41. THANK YOU