This document discusses international human resource management (IHRM). It defines IHRM and explains why organizations develop international HR strategies due to factors like global competition and differences in environments across countries. It also discusses the need for IHRM in managing expatriates and utilizing a global workforce. Further, it describes different types of international organizations and contrasts IHRM with domestic HRM. Key IHRM practices like international staffing, training, performance management and compensation are also summarized.

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INTERNATIONAL HUMAN
RESOURCE MANAGEMENT
Sankalpa Gunasekara

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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.

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 What are reasons that encouraged global
organizations to develop international HR
strategies?
Global competition and differences in
organizational environment across nations.

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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

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TYPES OF INTERNATIONAL ORGANIZATIONS
1. International Corporations
2. Multinational Corporations
3. Global Corporations
4. Transnational Corporations

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 International Corporations
• Domestic firms that builds on its existing capabilities to
penetrate overseas market.
Example : Honda, General Electric, P&G

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 Multinational Corporations
• MNCs have operating units (subsidiaries) located in foreign
countries
• Subsidiaries function as autonomous units
Examples : Shell, Philips, Xerox

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 Global Corporations
• Maintains control over its worldwide operations (subsidiaries)
through a centralized home office.
• They treat the entire world as a single market
Examples : Matsushita

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 Transnational Corporations
• Provides autonomy to independent country operations but
bring these operations together into an integrated whole
through networked structure
• They combines the local responsiveness of an MNC and the
efficiency of a global corporation
Examples : Ford & Unilever

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INTERNATIONAL HUMAN RESOURCE
MANAGEMENT
• Simple definition is ‘the process of managing people in
international settings’
• Scyllion (1995) defined IHRM as ‘the HRM issues and
problems arising from the internationalization of business, and
the HRM strategies, policies and practices which firms pursue
in response to the internationalization process
• IHRM is the management of HR in business operations in
atleast two nations

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DIFFERENCES BETWEEN IHRM &
DOMESTIC HRM
IHRM
• Address a broad
range of HRM
activities
• HR issues relate to
employees
belonging to more
than one nationality
• Greater
involvement of HR
manager in the
personal life of
employees
Domestic HRM
• Address a narrow
range of HRM
activities
• HR issues relate to
employees belonging
to single nationality
• Limited involvement
of HR manager in the
personal life of
employees

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IHRM
• Greater exposure to risks in
International assignments
• Has to manage several external
factors such as government
regulations of foreign country
Domestic HRM
• Limited risks in domestic
assignments
• Limited external factors to deal
with.

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External environment & IHRM
• Political Environment
• Cultural Environment

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IHRM Practices
• International staffing
• Pre-departure training for international assignments
• Repatriation
• Performance management in international
assignments
• Compensation issues in international assignments

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International staffing
• refers to the process of selecting employees for staffing
international operations of an MNC
MNCs can be staffed using three different sources
a. Home country or Parent Country National (PCN)
b. Host Country Nationals (HCN)
c. Third Country Nationals (TCN)

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• PCN
Employees of an organization who are citizens of the
country in which the headquarters of the company is
located
• HCN
Employees of an organization who are the citizens of
the country in which the foreign subsidiary is
located
• TCN
Employees of an organization who are the citizens
of the country other than the country where the
organization is headquarterd and the country that is
hosting the subsidiary

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Approaches to staffing subsidiaries
• Ethnocentric
foreign subsidiary has little autonomy. All
strategic decisions are made at the
headquarters. PCNs staff key positions at
quarters as well as the foreign subsidiary
• Polycentric
staff foreign subsidiaries of the firm with
HCNs and headquarters consist of PCNs
• Geocentric
staff my be PCNs, HCNs or TCNs
ability and not nationality is the key to
staffing

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Recruitment & Selection
18
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)

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Pre-departure Training for International
Assignments
• To make it easier for the employee to assume job
responsibilities and be effective in the foreign country as soon
as possible
• To facilitate cultural adaptation as quickly and as effectively as
possible

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3 elements of T&D programme
1. Language training
2. Cultural training
3. Managing personal and family
life

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Repatriation
• It is the process of bringing an expatriate home
after he/she has completed the international
assignment.
Organizations can follow 3 practices
1. Create knowledge and develop global leadership
skills
2. Ensure that candidates have cross-cultural skills
to match their technical abilities
3. Prepare people to make the transition back to
their home offices

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Performance Management in International
Assignments
Performance is the combination of
several factors
 Compensation Package
 Task Assigned to the Expatriate
 Headquarter’s Support
 Environment
 Cultural Adjustment

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Compensating Managers in International
Assignments
Components of expatriate compensation
• Home leave and travel allowances
• Children’s education allowance
• Currency differential payments
• Relocation allowance
• Housing allowance
• Cost of living adjustment
• Payments to protect from negative tax
consequences

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

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EFFECTIVE IHRM
IMPLEMENTATION
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.

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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.

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CONCLUSION
As organizations have gone global in their
operations, the impact of cultural differences
as well as workforce issues have caught the
attention of the HR managers. As the world
becomes boundary less, the ability to work in
a cross cultural environment becomes a
valuable asset for any executive.
Understanding, managing, and even
exploiting these cultural differences could
well spell the difference between success and
failure in several business situations.

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Thank You