2. Introduction
1. 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.
2. 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.
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3. 1. International HRM (IHRM) is the process of
1) procuring,
2) allocating, and
3) effectively utilizing human resources
4) in a multinational corporation, while
5) balancing the integration and differentiation of HR activities
in foreign locations.
Concept of IHRM?
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1. To reduce the risk of international human resource
2. To avoid cultural risks
3. To avoid regional disparities
4. To manage diversified human capital
Objectives of IHRM
4. More HR activities
Need for a broader
perspective
More involvement
in employee
personal lives
Changes in
emphasis as the
workforce mix of
expatriates and
locals vary
Risk exposure
More external
influences
Characteristics of IHRM
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5. HR Activities
• Procure
• Utilise
• Allocate
Types of Employees
•Home country nationals
•Host country nationals
•Third country nationals
Types of Countries
• Home country
• Host country
• Third country
Model of IHRM
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IHRM
6. Category of Countries
• Country where
the company is
headquartered
Parent/Home
Country
• Country where
the subsidiary of
an MNC is
functioning
Host Country
• Country where
neither
headquarter nor
subsidiary is
present
Third Country
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Example: If a business is headquartered in China and have operations in
India, China is the Parent/Home Country and India is the host Country. Any
other country apart from China and India are Third Country
7. Category of Employees
• Are citizens of the
country where the
MNC is
headquartered but
live & work
elsewhere
Parent-country
Nationals (PCNs)
• Employees born
and raised in a host
country. Citizens of
the country where
they live & work
Host-country
Nationals (HCNs)
• People who are
citizens of neither
the home country
or the host country
Third-country
Nationals (TCNs)
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8. Sources of Human Resources
Parent/Home
Country
Nationals
Host Country
Nationals
Third Country
Nationals
Inpatriates
Exptriates
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9. Parent/Home Country Nationals
1. Parent country nationals (PCNs) are employees who are citizens of and are
hired from the nation where an organization has its original and current
headquarters (the parent country).
2. Are citizens of the country where the MNC is headquartered but live & work
elsewhere
3. The term parent country national usually is used only to identify an
employee who is posted to an overseas country as an expatriate (overseas
assignment of more than one year), as a worker on a short-term assignment
(less than one year), or as a flexpatriate (several short-term overseas
postings, sometimes referred to as commuter assignments).
4. Often used
1. To start up operations (most common reason)
2. To provide technical expertise
3. To help the MNC maintain financial control over the operation
4. In top management positions
5. To give promising home-country managers international experience
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10. Host Country Nationals
1. HCNs are staff hired from the country where the
international subsidiary is operating (the host country).
2. Citizens of the country where they live & work
3. They are familiar with the culture and know the language
4. They can often do a better job than home-country nationals
5. They are less expensive than home-country personnel
6. Host-country governments often prefer use of host-country
nationals
7. Hiring them is good public relations
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11. Third Country Nationals
1. Third country nationals (TCNs) are citizens of neither the parent nor the
host country.
2. People who are citizens of neither the home country or the host country
1) As an example a American MNC which has a subsidiary at India may
employ a French person as the CEO to the subsidiary.
The Frenchman employed is a third country employee.
2) A Mexican, employed by an American company, working in Argentina
3. Advantages of Third-Country Nationals
1) They often require less compensation than home-country nationals
2) If they are from the same geographic region as the host country and
also know the company's culture, they can often achieve objectives
better than other types of managers
3) Have cross-cultural skills
4) Provide a global or transnational image
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12. Inpatriates
1. Persons who work in the parent/home country and
are citizens of a different country i.e. host country
2. Advantages of inpatriates
1) Help to develop global core competencies
2) Provide diversity and an international perspective in the home office
3) Improve career opportunities for company managers who are not
from the home country
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13. Expatriate
1. Any person who lives and works outside the country of which he/she is a
citizen
2. Includes home-country nationals, third-country nationals, and inpatriates
3. In most cases, expatriates must have work visas from the government of
the country where they live and work.
4. Example: Citizens of one EU country can live and work in other EU
countries (There are some restrictions on citizens of new EU member
countries.)
5. Expatriates are PCNs from the parent country operations, TCNs transferred
to either HQ or another subsidiary, and HCNs transferred into the parent
country.
6. Let us say John is a U.S. citizen. If John moves to France to live with no
immediate intention of going back to the US (but also no immediate
intention of becoming a French citizen) John is an American Expatriate. If
John goes to France to study, from his standpoint other Americans are
Home-country nationals, French people are Host-country nationals and
people from any country other than the US or France are Third-country
nationals.
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15. IHRM Approaches
1. Ethnocentric: key positions filled by nationals of parent
company.
2. Polycentric: host country nationals recruited to manage
subsidiary in their own country.
3. Geocentric: best people recruited, whatever their nationality.
4. Regiocentric: best people recruited within region in which
the subsidiary operates.
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16. Ethnocentric
Approach
• Key management
positions held by
parent-country
nationals
• Appropriate
during early
phases
• P&G, Philips
Polycentric
Approach
• Host-country
nationals hired to
manage
subsidiaries
• Parent-country
nationals occupy
key positions at
corporate HQ
• HUL
Geocentric
Approach
• Seeks best
people for key
jobs, irrespective
of nationality
• Underlying
principle of a
global
corporation
• Colgate-
Palmolive
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
IHRM Approaches in Recruitment & Selection
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3 categories of employees can be hired – parent country nationals
(PCNs), host country nationals (HCNs) & third country nationals (TCNs)
17. HRP
Recruitment & Selection
Training & Development
Performance
Management
Remuneration
Repatriation
Employee Relations
Multicultural
Management
Process of IHRM
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18. •Difficulty in implementing HR in host countries
•Aligning strategic business planning to HRP & vice-versa
•Developmental opportunities for international managers.
Human
Resource
Planning
•Ability to mix with organisation’s culture
•Ethnocentric, polycentric or geocentric staffing approach
•Selection of expatriates
•Coping with expatriate failure
•Managing repatriation process
Employee
Hiring
•Emphasis on cultural training
•Language training
•Training in manners & mannerisms
Training &
Development
IHRM Activities
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19. •Devising an appropriate strategy to compensate
•expatriates
•Minimising discrepancies in pay between parent,
• host & third country nationals
•Issues relating to the re-entry of expatriates into
•the home country
Compensation
•Constraints while operating in host countries
•need to be considered
•Physical distance, time differences & cost of
•reporting system add to the complexity
•Identification of raters to evaluate subsidiary
•performance
Performance
Management
•Handling industrial relations problems in a
•subsidiary
•Attitude of parent company towards unions in a
•subsidiary
•Union tactics in subsidiaries
Industrial
Relations
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20. Expatriate Assignment Life Cycle
Determining the
need for an
expatriate
Selection
Process
Pre-assignment
training
Departure
Post-arrival
Orientation &
Training
Crisis &
Adjustment
Crisis & Failure
Repatriation &
Adjustment
Reassignment
Abroad
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21. 1. The activity of bringing the expat back to the home
country
2. Can cause re-entry shock or reverse culture shock
3. Reasons
1) Posting period over
2) Children’s education
3) Not happy with overseas assignment
4) Failure to do a good job
Repatriation
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22. Problems with Repatriation
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1. Career Anxiety
2. Work Adjustment
3. Loss of Status & Pay
4. Coping with new Role Demand
5. Devaluing the International Experience
6. Social Factors
23. 1. High failure rates of expatriation and repatriation
2. Deployment – getting the right mix of skills in the
organization regardless of geographical location
3. Knowledge and innovation dissemination –
managing critical knowledge and speed of
information flow
4. Talent identification and development – identify
capable people who are able to function effectively
5. Barriers to women in IHRM
6. International ethics
7. Language (e.g. spoken, written, body)
Main Challenges in IHRM
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24. 1. Different labor laws
2. Different political climate
3. Different stage(s) of technological advancement
4. Different values and attitudes e.g. time,
achievement, risk taking
5. Roles of religion e.g. sacred objects, prayer,
holidays, etc
6. Educational level attained
7. Social organizations e.g. social institutions,
authority structures, interest groups, status systems
Main Challenges in IHRM
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25. New Trends In International HRM
1. International HRM places greater emphasis on a number of responsibilities
and functions such as relocation, orientation and translation services to help
employees adapt to a new and different environment outside their own
country.
2. Selection of employees requires careful evaluation of the personal
characteristics of the candidate and his/her spouse.
3. Training and development extends beyond information and orientation
training to include sensitivity training and field experiences Managers need to
be protected from career development risks, re-entry problems and culture
shock.
4. To balance the pros and cons of home country and host country evaluations,
performance evaluations should combine the two sources of appraisal
information.
5. Compensation systems should support the overall strategic intent of the
organization but should be customized for local conditions.
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26. Domestic HRM vs International HRM
1. Domestic HRM is done at national level and IHRM is done at
international level.
2. 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)
3. 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.
4. 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.
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27. Managerial Mindset
• 4 typical mindsets which are closely associated with eachother
mentioned from the least global to the most global mindset
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Defender Explorer Controller Integrator
28. Defender
• Internally focused
• Oriented to the domestic market
• Satisfied with domestic operations
• Uninterested in making foreign actions
• Almost no international element
• Foreign elements in domestic market are unwanted
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29. Explorer
• Aware of business opportunities in
foreign markets
• Perceives foreign markets
as not dangerous
• Treats international forays with
a lot of caution
• Prefers strategies of exporting and
franchising
• Domestic business is larger than
international, is predominant
• Foreign operations are managed from the
head office located in the home country
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30. Controller
• More externally oriented than the explorer
• Dominates in foreign markets with procedures
which were successful in domestic market
• Understands the nature of cultures
• Important: controller’s head office spends time
on controlling and less on coordinating
• Approval and sanction needed from the head
office
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31. Integrator
• Global perspective
• Knowledge and skills
• Understands, is aware, is competent
• Able to manage differences
between people, values and cultures
• Coordinates more than controls
• Critical function is creating mechanisms for
knowledge flow and transferring it from one part
of the global system to another
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32. Good International Manager
Ability to develop
• Effective local strategies
• Local government relations
• Cultural leadership skills
• Social networking skills
• Teamwork skills
• Good understanding of business environment
• Insightful local social knowledge
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