1. StudsPlanet
Leading Education consultant in India
www.StudsPlanet.com

2. International Human
Resource
Managment
Bino Joseph

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 3

4. Model of IHRM
• Procure
HR
• Utilise
Activities
• Allocate
• Home country nationals
Types of
• Host country nationals
employees
• Third country nationals
• Home country
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Countries • Host country
• Third country

5. Characteristics of IHRM
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 5

6. More Human Resource Activities
Human • Difficulty in implementing HR in host countries
Resource • Aligning strategic business planning to HRP & vice-versa
• Developmental opportunities for international managers.
Planning
• Ability to mix with organisation’s culture
Employee • Ethnocentric, polycentric or geocentric staffing approach
• Selection of expatriates
Hiring • Coping with expatriate failure
• Managing repatriation process
Training & • Emphasis on cultural training
• Language training 6
Development • Training in manners & mannerisms

7. • Devising an appropriate strategy to compensate expatriates
• Minimising discrepancies in pay between parent, host &
Compensation third country nationals
• Issues relating to the re-entry of expatriates into the home
country
• Constraints while operating in host countries need to be
Performance considered
• Physical distance, time differences & cost of reporting
Management system add to the complexity
• Identification of raters to evaluate subsidiary performance
Industrial • Handling industrial relations problems in a subsidiary
• Attitude of parent company towards unions in a subsidiary
Relations • Union tactics in subsidiaries
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8. Need for Broader Perspective
Pay issues
• Different countries, different currencies
• Gender based pay in Korea, Japan, Indonesia
Health insurance for employees & their families
Nepotism common in small businesses in Asia Pacific region
Overtime working – Korean & Japanese firms
Promotions based on seniority or merit 8

9. More Involvement in Employee’s
Personal Lives Changes in Emphasis
• Need for parent-country &
third-country nationals
• More involvement for decrease as more trained
both parent-country & locals become available
third-country nationals • Resources reallocated to
• Housing arrangements selection, training &
• Health care management development
• Remuneration packages
• Assist children left behind
in boarding schools
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10. • Physical safety of the employees
• Terrorism poses a great threat
Risk • Failure of expatriates to perform well 
financial losses to the firm
Exposure • Seizure of MNC’s assets in a foreign
country
• Dealing with ministers, political
figures, economic & social interest
External groups
• Hiring procedures dictated by host
Influence country
• Catch up with local ways of doing 10
business

11. Reasons for Growing Interest in
IHRM
Effective HRM  Indirect costs of poor
Globalisation of determinant of performance in
Business success in international business
international business very costly
Movement to network
Significant role in
organisations from
implementation &
traditional hierarchical
control of strategies
structures
11

12. Basic Steps in IHRM
HRP
Recruitment & Selection
Training & Development
Performance
Management
Remuneration
Repatriation
Employee Relations
12
Multicultural
Management

13. HR Planning
Key Issues in International HRP
• Identifying top management potential early
• Identifying CSF for future international managers
• Providing developmental opportunities
• Tracking & maintaining commitment to individuals in
international career paths
• Tying strategic business planning to HRP & vice-versa
• Dealing with multiple business units while focusing on
global & regional strategies 13

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

15. Advantages & Disadvantages of
Using PCNs
Advantages Disadvantages
• Familiarity with home • Difficulty in adapting to foreign
country
office, goals, practices
• Excessive cost of selecting,
• Easy organisational control training & maintaining expatriates
& coordination • Promotional opportunities
limited for HCNs
• International exposure to
• May try to impose inappropriate
promising managers HQ style
• PCNs  special skills & • Compensation differences for
experiences HCNs & PCNs
• Family adjustment problems
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16. Advantages & Disadvantages of
Using HCNs
Advantages Disadvantages
• Familiarity with the situation • Difficulty in exercising effective
in host-country control over the subsidiary’s
• Lower hiring costs operations
• Locals motivated due to • Communication problems with
promotional opportunities home office personnel
• Responds well to localisation • No opportunity for home
of subsidiary’s operations country’s nationals to gain
• No language barrier international experience
• HCNs stay longer in positions • Limited career opportunity
outside the subsidiary
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17. Advantages & Disadvantages of
Using TCNs
Advantages Disadvantages
• Salary & benefit • Host country govt. may
requirements lower than resent hiring TCNs
that of PCNs • May not return to their
• May be better informed country after assignment
about host country • Host country’s sensitivity
environment w.r.t nationals of specific
• Truly international countries
managers
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18. Expatriate Assignment Life Cycle
Determining the
Crisis & Reassignment
need for an
Adjustment Abroad
expatriate
Repatriation &
Post-arrival
Adjustment
Departure Orientation &
Training
Selection Pre-assignment Crisis & Failure
Process training
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19. Expatriate Failure
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
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20. Culture Shock Cycle
20

21. Family
Req’ments
Cross-
Technical
cultural
Ability
Suitability
Individual Situation Expatriate
Selection
Country-
MNC
cultural
Req’ments
Req’ments
Language
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22. Training & Development
Cross Cultural Language
Training Training
Management
Practical
Development
Training
& Strategy
22

23. HCN Training
Gaining knowledge Technical know-
about parent how specific to
organisation organisation
General awareness
Role of the
of the parent
subsidiary in the
country cultural
MNC 23
norms

24. Expatriate Performance
Management
Linkage to Identifying
Setting individual
organisational variables impacting
performance goals
strategy performance
Providing regular
Providing
feedback on Appraising the
opportunities for
progress towards performance
improvement
goals
Linking results with 24
rewards

25. Setting • Link unit goals to
individual/team goals
Individual • This will offer benchmarks
Performance for employees to strive
towards excellence
Goals
• Compensation packages
Variables • Type of task
Impacting • Moral & physical support
• Host environment
Performance • Multicultural adjustability 25

26. Paying Expatriates
Objectives to be achieved
• Attract qualified & interested employees
• Facilitate movement of expatriates between subsidiaries
• Consistent & reasonable relationship between pay levels
• Cost-effective
Problems faced in deciding remuneration package
• Discrepancies in pay between parent, host & third country
nationals
• Vary compensation based on family situation of expat
• Remuneration when re-entering parent-country organisation
• Must accommodate changes in international business 26
environment

27. Components of Remuneration
Package Factors Influencing Compensation
• Internal Environment
• Goal Orientation
• Capacity to pay
• Base salary • Competitive strategy
• Benefits • Organisational culture
• Internal workforce composition
• Allowances • Labour relations
• Incentives • Subsidiary role
• External Environment
• Taxes • Parent nationality
• Tax equalisation • Labour market characteristics
• Tax protection • Local culture
• Home & host country govts’ role
• Industry type
• Competitors’ strategies
27

28. Approaches to Designing the Pay
Package
• Balance-sheet approach
• Going-rate approach
• Lumpsum method
• Cafeteria approach
• Regional approach
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29. Repatriation
• The activity of bringing Preparation
the expat back to the
home country
• Can cause re-entry shock
Physical
or reverse culture shock Relocation
• Reasons
• Posting period over
• Children’s education
Transition
• Not happy with overseas
assignment
• Failure to do a good job
Readjustment
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30. Types of Assignments
Business Short-term Commuter Long-term
Visits
Min. Duration 1-30 days 1-3 months Returns home 6-12 months
at regular
intervals
Max. Duration 183 days 6-12 months 2-4 years 3-5 years
Short term assignments
Advantages Disadvantages
• Employee less restricted by family • Family split
concerns • Identical benefits taxed differently
• Spouse’s career unaffected in home & host 30
• Generally less expensive

31. Commuter assignments
Advantages Disadvantages
• Children’s education • Big strain on family
undisturbed relations if more than 1
• Spouse’s career unaffected year
Long term assignments
Advantages Disadvantages
• Family remains together • Spouse’s career affected
• All emoluments subject to a • Children’s education disturbed
single tax legislation • Loss of support from relatives &
friends
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32. International Labour Relations
Handling Labour Issues Union Tactics
• Delegated to foreign • Strike  most common tactic
subsidiaries • International Trade Secretariats
• Labour relations centralised (ITS)
when inter-subsidiary • Lobbying for restrictive national
production integration is legislations
present • Intervention of ILO, UNCTAD, EU
• Depends on nationality of & OECD
ownership of subsidiary • Principles of ILO
• More intervention when • Freedom of associations
subsidiary is of strategic
• Right to organise &
importance
collectively bargain
• Abolition of forced labour
• Non-discrimination in 32
employment

33. Multiculturalism
• Culture – customs, beliefs, norms & values that guide behaviour of people in a
society or passed on from one generation to the next
• Multiculturalism – people from many cultures (countries) interact regularly
• Benefits
• Greater creativity & innovation
• Sensitivity in dealing with foreign customers
• Possibilities of hiring best talent
• ‘Superorganisational culture’
• Universally acceptable HR policies & practices
• Functions of IHR manager
• Possess strong personal identity
• Have knowledge of beliefs & values of different cultures
• Display sensitivity
• Communicate clearly according to the cultural group
• Cultivate cosmopolitan outlook & attitudes
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34. Power Distance Uncertainty avoidance
Hofstede’s
Cultural
Dimensions
Individualism Masculinity
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