2. 2
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. Model of IHRM
3
HR
Activities
• Procure
• Utilise
• Allocate
Types of
employees
• Home country
nationals
• Host country
nationals
• Third country
nationals
Countries
• Home country
• Host country
• Third country
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
4
5. More Human Resource Activities
5
• 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
6. 6
• 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
7. Need for Broader Perspective
7
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. More Involvement in
Employee’s Personal
Lives Changes in Emphasis
8
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
development
9. 9
• Physical safety of the employees
• Terrorism poses a great threat
• Failure of expatriates to perform well
financial losses to the firm
• Seizure of MNC’s assets in a foreign
country
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
10. Reasons for Growing Interest in
IHRM
1
0
Globalisation of
Business
Effective HRM
determinant of
success in
international business
Indirect costs of poor
performance in
international business
very costly
Movement to network
organisations from
traditional
hierarchical
structures
Significant role in
implementation &
control of strategies
11. Basic Steps in IHRM
1
1
HRP
Recruitment &
Selection
Training &
Development
Performance
Management
Remuneration
Repatriation
Employee Relations
Multicultural
Management
12. HR Planning
1
2
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. Recruitment and Selection
1
3
The three categories of employees can be hired:
Parent Country National- A parent-country
national is a person working in a country other
than their country of origin and is also referred
to as an expatriate. Some of the benefits that
an expatriate can have include the foreign
earned income and housing allowance if the
home is in the foreign country.
14. 1
4
Host country employees- A host country
national is a person who is a citizen of a given
country. This individual may be a citizen of the
given country by birth or by naturalization. A
national of Britain is referred to as a Briton.
15. 1
5
Third country employees- These are the
employees who are not from home country/host
country but are employed at subsidiary or
corporate head quarters. 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.
16. Advantages & Disadvantages of
Using PCNs
Advantages Disadvantages
1
6
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
Family adjustment
problems
17. Advantages & Disadvantages of
Using HCNs
Advantages Disadvantages
1
7
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
18. Advantages & Disadvantages of
Using TCNs
Advantages Disadvantages
1
8
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
19. Expatriate Assignment Life Cycle
1
9
Determining the
need for an
expatriate
Selection
Process
Pre-assignment
training
Departure
Post-arrival
Orientation &
Training
Crisis &
Adjustment
Crisis &
Failure
Repatriation &
Adjustment
Reassignment
Abroad
20. Expatriate Failure
2
0
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
