2.  Human resource management (HRM) is the set
of activities directed at attracting, developing, and
maintaining the effective workforce necessary to
achieve a firm’s objectives. Recruiting and
selecting employees, providing training and
development, appraising performance, and
providing compensation and benefits are all part of
HRM.

3. What is IHRM
International HRM is the process of
procuring, allocating and utilizing human
resource in an a global firm.
Differences in culture, levels of
economic development, and legal
systems among countries may force
changes in HRM systems

4. The International Human Resource Management Process
©2004 Prentice Hall 20-4
HRM’s Strategic Content
Recruitment and Selection
Training and Development
Performance Appraisal
Compensation and Benefits
Labor Relations
Contribution to Organizational Effectiveness

5. Why International Human Resource
Management?
Increasing globalization, firms and employees in them
moving all over the world.
Major problems in international operations because of
human resource management
The role of HR in International Operations
Managing a Multicultural Workforce
Developing Managerial Talent in a Global Business
Environment

7. Main challenges in IHRM
 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. prayer, taboos, holidays, etc
 Educational level attained
 Social organizations e.g. social institutions,
7

8. Necessary Skills and Abilities for
International Managers
Skills and Abilities
Necessary to Do
The Job
•Technical
•Functional
•Managerial
Skills and Abilities
Necessary to Work
In a Foreign Location
•Adaptability
•Location-specific skills
•Personal characteristics
Improved Chances of Succeeding in
An International Job Assignment

9. Scope of Internationalization
 Size of staffing tasks depends on scope of firm’s
international involvement
 Export department
 International division
 Global organization

10. Centralization versus Decentralization of Control
 Centralized firms
 Favor home country managers
 Decentralized firms
 Favor host country managers
 Most common amongst multi domestic firms

11. Major Areas of IHRM
 The management of human resources in global
corporations
 The management of expatriate employees
 The comparison of HRM practices in a variety
of different countries

12. Questions for HR professionals
• Do we have a strategy for becoming an international firm?
• What type of managers will we need to be successful?
• How can I find out about the way that HRM is conducted
in other countries (laws, trade unions, labor market).
• What will be the impact of cultural norms on our HR
policies.
• How will we choose whether to send expatriates or use
local employees.
• How do we move people to different locations
• How do we manage transfer of knowledge across borders

13. Strategic Significance
 The international HRM process involves
understanding the strategic context of HRM within
the firm’s overall strategy, recruiting and selecting
appropriate managerial personnel, providing
necessary training and development, assessing
performance, providing compensation, and evaluating
managerial retention and turnover.

14. International Managerial Staffing Needs
 Most firms begin their international expansion with small-
scale exporting. Thus, during a firm’s initial foray into
foreign markets a home-country citizen, who may or may
not have special training in working in foreign markets,
usually manages the firm’s international transactions.
 Later when the firm establishes an international
department, subsidiary managers (usually host country
citizens) report to the authority of the international
division (usually a home country citizen).
 As a firm further expands its operations in a global
organization, a team of managers with expertise in the
firm’s product lines, necessary functional skills, individual
country markets, and the firm’s global strategy is usually
assembled.

17. Parent-country Nationals
Advantages
 Control and co-ordination by
HQ is maintained.
 Promising managers get
international experience.
 PCNs may be the best people
for the job.
 Assurance that the
subsidiary will comply with
company objectives policies
etc.
Disadvantages
 HCNs promotion
opportunities are limited.
 Adaptation to host country
may take a long time.
 PCNs may impose an
inappropriate HQ style.
 Compensation differences
between PCNs and HCNs may
cause problems.

18. Host-country Nationals
Advantages
 No problems with language
and culture.
 Reduced hiring costs.
 No work permits required.
 Continuity of management
improves since HCNs stay
longer in positions.
 Govt. policy may force
hiring of HCNs.
 Promotional opportunities
not limited - so higher
morale among HCNs.
Disadvantages
 HQ may have less control
over operations.
 HCNs may still have limited
career opportunities
outside the subsidiary.
 Hiring HCNs limits
opportunities for PCNs to
gain overseas experience.
 Hiring HCNs may
encourage a federation of
disintegrated national units
rather than one integrated
global unit.

19. Third-country Nationals
Advantages
 Salary and
compensation may be
lower than for PCNs.
 May be more familiar
with host country than
the PCNs.
Disadvantages
 Host government may
resent TCNs as much
as PCNs.
 TCNs may not comply
with HQ style of
management.
 TCNs may not want to
return after
assignment.

21. Complications for IHRM
compared to HRM
 Firms must decide whether managers will be
selected from the home country, from the host
country or from third countries.
 Training and development in an international firm
may be more complex than in a domestic firm.
 Compensation systems must be adapted to meet
the needs of each country’s labor market.

22. Complications for IHRM compared
to HRM
 International HR managers face a more complex task
than their domestic counterparts because differing
cultures, levels of economic development, and legal
systems among countries may require companies to
adapt their hiring, firing, training, and compensation
programs to each country.

23. Major differences between domestic HRM and IHRM
 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