3. The IHRM may be defined as the interplay between the
three important dimensions of human resource
management- types of employees, human resource
activities and the country of operation.
IHRM is the process of procuring, allocating and
effectively utilizing human resources in a multinational
corporations
4. UNDERSTANDING A FEW TERMS
Type of Employees in Multi National Companies
HCN, PCN, and TCN
HCN (Host Country National)
IBM employs Indian Citizens in Indian Operations
PCN (Parent Country National)
IBM sends US citizen to India on assignment
TCN (Third Country National)
IBM sends Singaporean employee on assignment to
5. IHRM STRATEGIES
Ethnocentric Approach
Staffing the key positions with PCNs
Generally common at the initial stage of internationalization
Lack of qualified HCNs
Limits the opportunities for HCNs and hence more turn over
Compensation variation between PCN and HCN and hence low
morale of HCNs
Polycentric Approach
HCNs are recruited to manage subsidiaries in their own countries
and PCN in corporate HQs
Avoids adjustment problems of expatriate
Employment of HCN is less expensive
Some of the disadvantages of Ethnocentric are overcome
6. Geocentric Approach
Utilisation of best people for the key jobs throughout the
organisation regardless of nationality
Availability of competent persons throughout the organisation
Organisations able to deliver high performance
Regiocentric Approach
Modification of Geocentric approach
Staffing is on regional approach
It helps the organisations to move from ethno/polycentric to
geocentric
Opportunities are limited to regional level only
7. Stages of Moving Towards
Global Business
Network Subsidiary
Foreign Production
Sale Subsidiary
Exporting
Licensing
Subcontracting
8. Path to Global Status
Exporting
Exporting is Initial stage.
Generally handled by intermediary.
Appointing for a export manager-A PCN.
Could be marketing department function.
HR functions are similar to domestic HRM.
Sales Subsidiary
Direct sales with establishment with branch offices in foreign market.
Development of expertise, agents and distributors in foreign market.
Strategy option PCN versus HCN
HR activities depends on PCN or HCN
9. Path to Global Status
International Division
Transition stage before establishing foreign production facility / JV with local
firm / Acquisition of local firm.
Establishing Subsidiary in foreign country.
Shift from PCN to HCN.
Separate HR manager from HR function to look after expat management for the
same.
Global Production
Firm’s growth leads to foreign production.
Global competition , flow of information, technology.
Adaptation of HRM activities for host countries.
Results in balanced control/ Decentralization of strategic planning/formulating /
Implementing HR strategies.