The document discusses key aspects of international human resource management (IHRM). It defines IHRM as procuring, allocating, and utilizing human resources across international businesses. There are three main categories of employees in IHRM - parent country nationals, host country nationals, and third country nationals. The document outlines factors that have increased the need for IHRM like globalization, managing expatriates, and effectively utilizing talent across locations. It also discusses IHRM models, activities, challenges, and strategies around recruitment, training, performance management, compensation, and repatriation for multinational corporations.

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
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

5. 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
5

6. More Human Resource Activities
•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

7. • 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

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
• More involvement for
both parent-country &
third-country nationals
• Housing arrangements
• Health care
• Remuneration packages
• Assist children left behind
in boarding schools
Changes in Emphasis
• Need for parent-country &
third-country nationals
decrease as more trained
locals become available
• Resources reallocated to
selection, training &
management development
9

10. • 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

11. Reasons for Growing Interest in
IHRM
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

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

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

15. Advantages & Disadvantages of
Using PCNs
Advantages
• Familiarity with home
office, goals, practices
• Easy organisational control
& coordination
• International exposure to
promising managers
• PCNs  special skills &
experiences
Disadvantages
• 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
15

16. Advantages & Disadvantages of
Using HCNs
Advantages
• 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
Disadvantages
• 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
16

17. Advantages & Disadvantages of
Using TCNs
Advantages
• Salary & benefit
requirements lower than
that of PCNs
• May be better informed
about host country
environment
• Truly international
managers
Disadvantages
• 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
17

18. Expatriate Assignment Life Cycle
18
Determining the
need for an
expatriate
Selection
Process
Pre-assignment
training
Departure
Post-arrival
Orientation &
Training
Crisis &
Adjustment
Crisis & Failure
Repatriation &
Adjustment
Reassignment
Abroad

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
19

20. Culture Shock Cycle
20

21. Expatriate
Selection
Family
Req’ments
Cross-
cultural
Suitability
MNC
Req’ments
Language
Country-
cultural
Req’ments
Technical
Ability
21
Individual Situation

22. Training & Development
Cross Cultural
Training
Language
Training
Practical
Training
Management
Development
& Strategy
22

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

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

25. • Link unit goals to
individual/team goals
• This will offer benchmarks
for employees to strive
towards excellence
Setting
Individual
Performance
Goals
• Compensation packages
• Type of task
• Moral & physical support
• Host environment
• Multicultural adjustability
Variables
Impacting
Performance
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
environment
26

27. Components of Remuneration
Package
• Base salary
• Benefits
• Allowances
• Incentives
• Taxes
• Tax equalisation
• Tax protection
Factors Influencing Compensation
• Internal Environment
• Goal Orientation
• Capacity to pay
• Competitive strategy
• Organisational culture
• Internal workforce composition
• Labour relations
• Subsidiary role
• External Environment
• Parent nationality
• Labour market characteristics
• 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
28

29. Repatriation
Preparation
Physical
Relocation
Transition
Readjustment
• The activity of bringing
the expat back to the
home country
• Can cause re-entry shock
or reverse culture shock
• Reasons
• Posting period over
• Children’s education
• Not happy with overseas
assignment
• Failure to do a good job
29

30. Types of Assignments
Business
Visits
Short-term Commuter Long-term
Min. Duration 1-30 days 1-3 months Returns home
at regular
intervals
6-12 months
Max. Duration 183 days 6-12 months 2-4 years 3-5 years
30
Short term assignments
Advantages
• Employee less restricted by family
concerns
• Spouse’s career unaffected
• Generally less expensive
Disadvantages
• Family split
• Identical benefits taxed differently
in home & host

31. 31
Commuter assignments
Advantages
• Children’s education
undisturbed
• Spouse’s career unaffected
Disadvantages
• Big strain on family
relations if more than 1
year
Long term assignments
Advantages
• Family remains together
• All emoluments subject to a
single tax legislation
Disadvantages
• Spouse’s career affected
• Children’s education disturbed
• Loss of support from relatives &
friends

32. International Labour Relations
Handling Labour Issues
• Delegated to foreign
subsidiaries
• Labour relations centralised
when inter-subsidiary
production integration is
present
• Depends on nationality of
ownership of subsidiary
• More intervention when
subsidiary is of strategic
importance
Union Tactics
• Strike  most common tactic
• International Trade Secretariats
(ITS)
• Lobbying for restrictive national
legislations
• Intervention of ILO, UNCTAD, EU
& OECD
• Principles of ILO
• Freedom of associations
• Right to organise &
collectively bargain
• Abolition of forced labour
• Non-discrimination in
employment
32

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
33

34. Power Distance Uncertainty avoidance
Individualism Masculinity
Hofstede’s
Cultural
Dimensions
34

35. 35