1. International Human
Resource Management
(Global HRM)
By, Priya Unadkat

2. Definition:
HRM as a process of procuring, developing,
compensating and retaining people in organization
operating beyond national boundaries at the global
level
17–2

3. Inter-country Differences Affecting HRM
 Cultural Factors
 Economic Systems
 Labor cost
 Legal and Industrial Relations Factors

4. Cont’d
 Cultural Factors
 U.S. Managers are more concerned with getting the jobs done.
 Chinese Managers are more concerned with maintaining a
harmonious environment.
 Hong Kong Managers fell between these extremes.
 Compared to U.S. employees, Mexican workers expect
managers to keep distance and be formal
 When the workload increases, Australian and Singaporean
firms add more staff while Korean and Japanese firms insist
existing staff to work for longer hours.

5.  Economic Systems
 Some countries in Euro zone put more restrictions on the
number on hours an employee can work.
 Portuguese workers average about 1980 hours of work
annually while German workers average 1648 hours.
 Labor cost
 Higher labor cost in USA and UK than India
 Legal and Industrial Relations Factors
 Germany, codetermination employees have legal right in
policy making
 India, state plays major role in IR.
Cont’d

6. Differences between Domestic HRM and
IHRM
1. More HR activities
2. The need for a broader perspective
3. More involvement in employees’ personal lives
4. Changes in emphasis as the workforce mix of expatriates
and locals varies
5. Risk exposure
6. Broader external influences

7. 1. More HR Activities
 Human Resource Planning
 Difficulty in implementing HR procedure in host countries.
 Difficulty in aligning strategic business planning to HRP and vice-versa.
 Providing developmental opportunities for international managers.
 Employee Hiring
 Ability to mix with organisation’s culture.
 Ethnocentric, polycentric or geocentric approach to staffing.
 Selection of expatriates.
 Coping with expatriate failures.
 Managing repatriation process.
 Training and Development
 Emphasis on cultural training
 Language training
 Training in manners and mannerisms.

8. Cont’d
 Compensation
 Devising an appropriate strategy to compensate expatriates.
 Minimising discrepancies in pay between parent, host and third country
nationals.
 Issues relating to the re-entry of expatriates into the home country.
 Performance Management
 Constraints while operating in host countries need to be considered.
 Physical distance, time difference and cost of reporting system add to the
complexity.
 Identification of raters to evaluate subsidiary performances.
 Industrial Relations
 Who should handle industrial relations problem in a subsidiary?
 What should be the attitude of parent company towards unions in a
subsidiary?
 What should be union tactics in subsidiaries?

9.  Tax equalization
 Relocation & orientation
 Administrative services
 Host government relation
 Language translation
2. The need for a broader perspective
 More than one national group of employees working.
Cont’d

10. 3. More involvement in employees’ personal lives
 Schooling, housing
 Banking, investment
 Recreational program
4. Changes in emphasis as the workforce mix of expatriates and
locals varies
 As operations matures
 Local staff availability
 Taxation, relocation, orientation
Staffing, training & development
Cont’d

11. 5. Risk exposure
 Expatriate failure
 Under performance
Higher cost of failure – direct & indirect
 Terrorism
6. Broader external influences
 Type of government
 Developed / developing country
Cont’d

12. A Model of IHRM

13.  International
 No investment outside
home country
 Import-export
 Sells in more than one
country
 Standard product
 Multinational
 Investment in other
countries
 Manufacturing
 Operates in more than
one country
 Customized products

14. Basic Functions in International
HRM
HRP
Recruitment and Selection
Training and Development
Performance Management
Remuneration
Repatriation
Employee Relations
ORGANISATIONALEFFECTIVENESS

15. Basic Functions in International
HRM
HRP
Recruitment and Selection
Training and Development
Performance Management
Remuneration
Repatriation
Employee Relations
ORGANISATIONALEFFECTIVENESS

16. International recruitment

17. Sources of Global Recruitment
 Parent Country Nationals:
 Citizens of the country in which the multinational company
has its headquarters.
 Host Country Nationals:
 Employees of the company’s subsidiary who are the citizens
of the country where the subsidiary is located.
 Third Country National:
 For eg: Mr. Akhil- an Indian citizen-is working for an
American subsidiary in France. Mr. Akhil for the American
subsidiary in France is called third country national.

18. Approaches to Staffing
Approaches for staffing:
Ethnocentric
Polycentric
Geocentric
Regiocentric

19. Ethnocentric
 PCNs
 Strategic decisions are made at headquarters;
 Limited subsidiary autonomy;
 Key positions in domestic and foreign operations
are held by headquarters’ personnel;
 PCNs manage subsidiaries.

21. Polycentric
 Each subsidiary is a distinct national entity with
some decision-making autonomy;
 HCNs manage subsidiaries who are seldom
promoted to HQ positions;
 PCNs are rarely transferred to subsidiary
positions. They are at key positions at headquarter.

23. Geocentric
 A global approach - worldwide integration;
 View that each part of the organization makes a
unique contribution;
 Nationality is ignored in favor of ability:
 Best person for the job;
 Color of passport does not matter when it comes to rewards,
promotion and development.

25. Regiocentric
 Reflects a regional strategy and structure;
 Regional autonomy in decision making;
 Staff move within the designated region,
rather than globally;
 Staff transfers to headquarter are rare.

27. The Expatriate Assignment Life
Cycle
Determining
the Need for
Expatriate
The
Selection
Process
Crisis and
failure
Crisis and
Adjustment
Repatriation
and
Adjustment
Departure
Pre-assignment
Training
Post-arrival
Orientation and
Training
Reassignment
Abroad
or
or

28. Why Expatriate Assignments Fail
 Personality
 Personal intentions
 Family pressures
 Inability of the spouse to adjust
 Inability to cope with larger overseas responsibility.
 Lack of cultural skills
17–28

29. Cultural shock
Disruptions to establish routines of
behaviour

30. Culture Shock Cycle

31. Factors in Expatriate Selection
Technical
Ability
Cross-Cultural
Suitability
Family
Requirements
Country-
Cultural
Requirements
Language
MNC
Requirements
Selection
Decision
Individual
Situation

32. International
Training

33. Components of Effective Training
 Cultural awareness programs
 Preliminary visits
 Language training
 Practical assistance
 Training for the training role
 TCN and HCN expatriate training

34. International
Performance Management

35.  Crucial post assignment issue
 Steps
 Linkage to organizational strategy
 Setting individual goals
 Identifying variables
 Appraising performance
 Feedback on progress towards goal
 Opportunity for improvement
 Linking result with rewards

36. International
compensation

37.  The main approaches to calculating expatriate pay
are:
 Home-based pay /Balance sheet approach – The provision
of remuneration (pay, benefits and allowances) to expatriates
that is the same as in their home country.
 Host-based pay/Going rate approach – Paying the market
rate for the job in the host country. Additional allowances
may be paid.
 Selected country based – Salary structure in a selected
country
 Hybrid

38. Incentives
 Foreign service premiums
 Financial payments over and above regular base pay,
and typically range between 10% and 30% of base pay.
 Hardship allowances
 Payments to compensate expatriates for exceptionally
hard living and working conditions at certain foreign
locations.
 Mobility premiums
 Lump-sum payments to reward employees for moving
from one assignment to another.
17–38

39.  Cost-of-living allowances (COLAs)
 Relocation allowance
 Housing/utilities
 Benefits
 Car, Education to children, Home leave,
Recuperation leave

40. Taxation:
 Most time consuming issue
 Tax equalization
 Tax equalization is a process that ensures that the tax
costs incurred by an assignee on an international
assignment approximates what the tax costs would have
been had he remained at home.
 Tax protection
 Tax protection is a process that reimburses an assignee
the excess taxes he incurs while on an international
assignment.

41. Useful facts…..
 Individualistic cultures like the U.S. and the UK are OK with
bonuses/commissions based on individual
performance. Collective cultures like Japan would prefer to have
group bonuses/commissions.
 Some countries have a different definition of “family”. In India
family includes parents not just children. This makes a
difference in insurance coverage.
 Rating employees on performance is difficult in the Middle East
and Asia (i.e. Korea) because of face-saving. It is difficult for
managers to talk to employees about poor performance as this
causes the employee to “lose face”.

42. Cont…
 China has a very aggressive sales compensation
environment, India shows more interest in base salary
and the CTC (cost-to-company) package than variable
compensation.
 Japanese organization follow Nenko system for
promotion.
 U.S. workers want two weeks vacation, not because of
culture, but because that is the norm in the U.S. In
Germany, it is likely to be one month of vacation.

43.  In Japan or Korea large changes in bonuses and allowances
are preferred over large changes in base pay because social
security and national health insurance rates paid by employers
are based on basic pay, not bonuses or allowances.
 Union influences play an important role in determining wage
policies in Australia. In Hong Kong, by contrast, labour
unions are extremely weak.
Cont…

44. Repatriation :
 Needs careful handing
 May result in re-entry shock or reverse culture shock
 Future expatriates may depend on repatriation
programs
 Benefits:
 MNCS like Cisco, Ford, are hiring foreign return Indian
executives
 Global culture
 Global social network
 Co-ordination and control
 Exposure and expertise

45. The Repatriation Process
Preparation
Physical
Relocation
Transition
Re-adjustment
Repatriation
Process
• Future
• New positions
• Checklist of items
• Good bye to friends
• Travelling
• Relocation assistnce
• Housing and
schooling
• Driving license
• Bank accounts
• Coping with reverse
culture shock
• Career demand
Preparation
Physical
Relocation
Transition
Re-adjustment
Repatriation
Process
Preparation
Physical
Relocation
Transition
Re-adjustment
Repatriation
Process
Preparation
Physical
Relocation
Transition
Re-adjustment
Repatriation
Process
Preparation
Physical
Relocation
Transition
Re-adjustment
Repatriation
Process

46. Thank
You