This document discusses international human resource management (IHRM). It defines IHRM as procuring, allocating, and utilizing human resources across international businesses. Key aspects of IHRM include managing expatriates, adapting to globalization, and effectively using employees in corporate offices and foreign plants. The document outlines IHRM models, activities, types of employees, and considerations for countries involved. It also discusses challenges such as cultural differences, distances, and varying laws that make IHRM complex.
3. 3
Definition
• The process of procuring, allocating and
effectively utilising human resources in an
international business is called international
human resources management (IHRM).
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
4. Model of IHRM
4
HR
Activities
• Procure
• Utilise
• Allocate
Types of
employees
• Home country
nationals
• Host country
nationals
• Third country
nationals
Countries
• Home country
• Host country
• Third country
5. 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
5
6. More Human Resource
Activities6
• 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
7. 7
• 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
Compensation
• 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
8. Pay issues
• Different countries, different currencies
• Gender based pay in Korea, Japan, Indonesia
Health insurance for employees & their families
Overtime working – Korean & Japanese firms
Promotions based on seniority or merit
Need for Broader Perspective
8
9. More involvement for both
parent-country & third-
country nationals
Housing arrangements
Health care
Remuneration packages
Assist children left behind in
boarding schools
Need for parent-country
& third-country nationals
decrease as more
trained locals become
available.
Resources reallocated to
selection, training &
management
9
More Involvement in
Employee’s Personal Lives
Changes in Emphasis
10. 10
• Physical safety of the employees.
• Failure of expatriates to perform well
financial losses to the firm
Risk
Exposure
• 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
11. Reasons for Growing Interest in
IHRM11
Globalisation of
Business
Effective HRM
determinant of
success in
international business
Movement to network
organisations from
traditional hierarchical
structures
Significant role in
implementation &
control of strategies
12. Basic Steps in IHRM
12
HRP
Recruitment &
Selection
Training & Development
Performance
Management
Remuneration
Repatriation
Employee
Relations
13. Recruitment & Selection
13
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
3 categories of employees can be hired – parent country nationals (PCNs),
host country nationals (HCNs) & third country nationals (TCNs)
14. Advantages & Disadvantages of
Using PCNs
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
14
Advantages Disadvantages
15. Advantages & Disadvantages of
Using HCNs
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
15
Advantages Disadvantages
16. Advantages & Disadvantages of
Using TCNs
Salary & benefit
requirements lower than
that of PCNs.
May be better informed
about host country
environment.
Truly international managers
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
16
Advantages Disadvantages
17. Expatriate Assignment Life
Cycle17
Determining the
need for an
expatriate
Selection
Process
Pre-assignment
training
Departure
Post-arrival
Orientation &
Training
Crisis &
Adjustment
Crisis &
Failure
Repatriation &
Adjustment
Reassignment
Abroad
18. Expatriate Failure
18
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