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Introduction To International HRM

  2. 2 Myths About Globalisation • Myth #1: – Global = International • Myth #2: – Global strategy means doing same thing everywhere • Myth #3: – Globalizing = stateless corporation, no national/community ties • Myth #4: – Globalisation requires abandoning country images and values • Myth #5: – Globalizing means tackling on acquisitions or alliances in other countries, without much integration/change • Myth #6: – A strategy must involves sales/operations in another country
  4. 4 • International Organization – – Transports its business outside home country; each of its operations is a replication of the company's domestic experience; structured geographically; and involves subsidiary general managers – Companies offering multiple products often find it challenging to remain organized e.g. need to have a common information systems for accounting, financial and management controls, and marketing. – Most evolve to become multinational companies • Multinational Organization– – grows and defines its business on a worldwide basis, but continues to allocate its resources among national or regional areas to maximize the total. • Global Organization – – Treat the entire world as though it were one large country; may be the entire company or one or more of its product lines; may operate with a mixture of two or more organizational structure simultaneously. • Transnational organization – – Use specialized facilities to permit local responsiveness; more complex coordination mechanism to provide global integration Types Of Organizations
  5. 5 MultinationalInternational TransnationalGlobal Global Efficiency HighLow High Local Responsiveness Firm Type And Responsiveness
  6. 6 Important Lessons for Global Firms • The need to manage change • The need to respect local cultures • The need to understand a corporation’s culture • The need to be flexible • The need to learn.
  7. 7 International HRM • International human resource management is concerned with the human resource problems of multi-national firms in foreign subsidiaries with the unfolding of HR issues that are associated with the various stages of the internationalization process - Boxall (1995)
  8. 8 International HRM • International HRM (IHRM) is the process of: – Procuring, – Allocating, and – Effectively utilizing human resources – In a multinational corporation, while – Balancing the integration and differentiation of HR activities in foreign locations • Objectives – To reduce the risk of international human resource – To avoid cultural risks – To avoid regional disparities – To manage diversified human capital.
  9. 9 P. Morgans Model of IHRM • Morgan defines IHRM as the interplay among 3 dimensions: – Human resource activities – Types of employees – Countries of operation
  10. 10 Who is an expatriate?  An employee who is working and temporarily residing in a foreign country • Some firms prefer to use the term “international assignees” • Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country  Global flow of HR: more complexity in activities and more involvement in employees' lives.
  11. 11 International Assignments Create Expatriates
  12. 12 Differences between D-HRM and I-HRM  More HR activities: taxation, culture orientation, administrative services  The need for a broader perspective: cater to multiple needs  More involvement in employees’ personal lives: adjustment, spouses, children  Changes in emphasis as the workforce mix of expatriates and locals varies: fairness  Risk exposure: expatriate failure, terrorism  Broader external influences: government regulations, ways of conduct  Complexity involved in operating in different countries, varied nationalities of employees  The different Cultural Environment  The industry or industries with which the MNC is involved  Attitudes of Senior Management  Extent of reliance of MNC on home country domestic market.
  13. 13 Variables Involved
  14. 14 Main Challenges In IHRM • High failure rates of expatriation and repatriation • Deployment – getting the right mix of skills in the organization regardless of geographical location • Knowledge and innovation dissemination – managing critical knowledge and speed of information flow • Talent identification and development – identify capable people who are able to function effectively • Barriers to women in IHRM • International ethics • Language (e.g. spoken, written, body) • 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. sacred objects, prayer, taboos, holidays, etc • Educational level attained • Social organizations e.g. social institutions, authority structures, interest groups, status systems.
  15. 15 Qualities of Global Managers • Understand the worldwide business • Learn about many cultures • Work with many types of people • Create cultural synergy • Adapt to living in many cultures • Use cross-cultural skills daily • Treat foreign colleagues as equals • Use foreign assignments as career development.
  16. 16 Workforce Diversity • Diversity is the mixture of people in business, with their variety of backgrounds, experiences, styles, cultures, skills, gender and competencies • Differences among people in age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background, capabilities/disabilities and in the thought process. • Management system which incorporates the differences found in a multicultural workforce in a manner which results in the highest level of productivity for both the organization and the individual.
  17. 17 Equal Employment Opportunities (EEO) • It means eliminating barriers to ensure that all employees are considered for the employment of their choice and have the chance to perform to their maximum potential. • Objectives - – To promote recognition and acceptance of everyone's right to equality of opportunity – TO eliminate, as far as possible, discrimination against people by prohibiting discrimination on the basis of various attributes – TO eliminate, as far as possible, sexual harassment – TO provide redress for people who have been discriminated against or sexually harassed. • EEO practices include: – fairness at work, – hiring based on merit and – promotion based on talent. – It concerns all aspects of employment including recruitment, pay and other rewards, career development and work conditions.
  18. 18 End Of Module
  19. 19 Annexure
  20. 20 International Compensation • Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. • Compensation provided to employees can direct in the form of monetary benefits and/or indirect in the form of non-monetary benefits known as perks, time off, etc. • Compensation does not include only salary but it is the sum of all rewards and allowances provided to the employees in return for their services. • Compensation is extrinsic reward for an employee. Extrinsic rewards include praise from a superior, salary, employee benefits, career progression etc. • Almost all the employees accept jobs in MNC’s take-up assignments in various countries, & take-up the risk, bear inconveniences & discomforts in foreign assignments mostly based on the compensation package.
  21. 21 International Compensation • The most important objective of any pay system is fairness or equity, generally expressed in three forms: • Internal equity: – This ensure that more difficult jobs are paid more. • External equity: – Where jobs are fairly compensated in comparison to similar jobs in labour market. • Individual equity: – It ensures equal pay is ensured for equal work • Other Objectives – Attract talent and Retain talent – Ensure equity – New and desired behavior – Control costs – Comply with legal rules – Ease of operation
  22. 22 International Compensation • The most important objective of any pay system is fairness or equity, generally expressed in three forms: • Internal equity: – This ensure that more difficult jobs are paid more. • External equity: – Where jobs are fairly compensated in comparison to similar jobs in labour market. • Individual equity: – It ensures equal pay is ensured for equal work
  23. 23 Major Differences Between D-HRM and I-HRM • 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