Human resource management (HRM) is the set of activities directed at attracting, developing, and maintaining the effective workforce necessary to achieve a firm’s objectives. Recruiting and selecting employees, providing training and development, appraising performance, and providing compensation and benefits are all part of HRM.
What is IHRM International HRM is the process of procuring, allocating and utilizing human resource in an a global firm. Differences in culture, levels of economic development, and legal systems among countries may force changes in HRM systems
Why International Human ResourceManagement? Increasing globalization, firms and employees in them moving all over the world. Major problems in international operations because of human resource management The role of HR in International Operations Managing a Multicultural Workforce Developing Managerial Talent in a Global Business Environment
Main challenges in IHRM Different labor laws Different political climate Different stage(s) of technological advancement Different values and attitudes e.g. time, achievement, risk taking Roles of religion e.g. prayer, taboos, holidays, etc Educational level attained Social organizations e.g. social institutions, 7
Necessary Skills and Abilities forInternational Managers Skills and Abilities Skills and Abilities Necessary to Do Necessary to Work The Job In a Foreign Location •Technical •Adaptability •Functional •Location-specific skills •Managerial •Personal characteristics Improved Chances of Succeeding in An International Job Assignment
Scope of Internationalization Size of staffing tasks depends on scope of firm’s international involvement Export department International division Global organization
Centralization versus Decentralization of Control Centralized firms Favor home country managers Decentralized firms Favor host country managers Most common amongst multi domestic firms
Major Areas of IHRM The management of human resources in global corporations The management of expatriate employees The comparison of HRM practices in a variety of different countries
Questions for HR professionals• Do we have a strategy for becoming an international firm?• What type of managers will we need to be successful?• How can I find out about the way that HRM is conducted in other countries (laws, trade unions, labor market).• What will be the impact of cultural norms on our HR policies.• How will we choose whether to send expatriates or use local employees.• How do we move people to different locations• How do we manage transfer of knowledge across borders
Strategic Significance The international HRM process involves understanding the strategic context of HRM within the firm’s overall strategy, recruiting and selecting appropriate managerial personnel, providing necessary training and development, assessing performance, providing compensation, and evaluating managerial retention and turnover.
International Managerial Staffing Needs Most firms begin their international expansion with small- scale exporting. Thus, during a firm’s initial foray into foreign markets a home-country citizen, who may or may not have special training in working in foreign markets, usually manages the firm’s international transactions. Later when the firm establishes an international department, subsidiary managers (usually host country citizens) report to the authority of the international division (usually a home country citizen). As a firm further expands its operations in a global organization, a team of managers with expertise in the firm’s product lines, necessary functional skills, individual country markets, and the firm’s global strategy is usually assembled.
Parent-country NationalsAdvantages Disadvantages HCNs promotion Control and co-ordination by opportunities are limited. HQ is maintained. Adaptation to host country Promising managers get may take a long time. international experience. PCNs may impose an PCNs may be the best people inappropriate HQ style. for the job. Compensation differences Assurance that the between PCNs and HCNs may subsidiary will comply with cause problems. company objectives policies etc.
Host-country NationalsAdvantages Disadvantages No problems with language HQ may have less control and culture. over operations. HCNs may still have limited Reduced hiring costs. career opportunities No work permits required. outside the subsidiary. Continuity of management Hiring HCNs limits improves since HCNs stay opportunities for PCNs to longer in positions. gain overseas experience. Govt. policy may force Hiring HCNs may hiring of HCNs. encourage a federation of disintegrated national units Promotional opportunities rather than one integrated not limited - so higher global unit. morale among HCNs.
Third-country Nationals Disadvantages Host government mayAdvantages resent TCNs as much Salary and as PCNs. compensation may be TCNs may not comply lower than for PCNs. with HQ style of May be more familiar management. with host country than TCNs may not want to the PCNs. return after assignment.
Complications for IHRMcompared to HRM Firms must decide whether managers will be selected from the home country, from the host country or from third countries. Training and development in an international firm may be more complex than in a domestic firm. Compensation systems must be adapted to meet the needs of each country’s labor market.
Complications for IHRM comparedto HRM International HR managers face a more complex task than their domestic counterparts because differing cultures, levels of economic development, and legal systems among countries may require companies to adapt their hiring, firing, training, and compensation programs to each country.
Major differences between domestic HRM and IHRM Business activities e.g. taxation, international relocation, expatriate remuneration, performance appraisals, cross- cultural training and repatriation Increased complexities e.g. currency fluctuations, foreign HR policies and practices, different labor laws Increased involvement in employee’s personal life e.g. personal taxation, voter registration, housing, children’s education, health, recreation and spouse employment Complex employee mix – cultural, political, religious, ethical, educational and legal background Increased risks e.g. emergency exits for serious illness, personal security, kidnapping and terrorism