introduction to ihrm

1. International Human Resource
Management
Managing people in a multinational context
Preeti Bhaskar
Symbiosis Center for Management Studies,
Noida

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IHRM Chapter 1
• Meaning and scope
• Globalization
• Dimensions of IHRM
• Objectives of IHRM
• Difference between domestic HRM and IHRM
• International assignments
• Significance of IHRM in International Business
• Challenges of IHRM
• HRM practices in different countries.
Chapter Outline
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International Imperative
Why organizations expand Internationally
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International Expansion
• Strategies for expanding internationally
– Exporting locally produced goods to other country
– Subcontracting or licensing production of certain
goods or services to foreign partner
– Entering into joint venture with foreign partner
– Setting up operations (making a direct investment) in
form of foreign branch or subsidiary
International Expansion
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Globalizing the HR - Function
As companies Globalize, their HR departments need to understand the
challenges of working internationally and serving a global organization
like:
 Supporting personnel to serve the needs of their global organizations.
 Acquiring competent personnel to work in a Global Environment.
 Train or explain alliance about and be a better global business partner.
 Administration and use supplement the capabilities for existing professionals.
 Frame and Practice HR polices that adopt multinational Cultural, Political, Legal and
Industrial framework.
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International Human Resource
Management (IHRM)
The process of procuring, allocating and effectively
utilizing human resources in an international business is
called International Human Resource Management or
IHRM.
International Human Resource Management is the
process of sourcing, allocating and effectively utilizing
human resources in a multinational organization.
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Difference between
Domestic Vs. International HRM
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Differences between Domestic HRM and IHRM
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The practice of HRM in the international context is different
from its domestic counterpart in a number of ways.
These include:
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• Being responsible for a greater number of functions and
activities such as selection, training and management of
international assignees
• much broader knowledge of foreign country employment
laws and global organization designs.
• more closely involved with employees lives as the
• Being involved with greatly expanded and constantly
changing mix of employees (from the home countries and
foreign locals), adding considerable diversity and
complexity to the HR tasks.
IHRM Chapter 1
•Dimensions of IHRM

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• Cope –up with more external influences
• Face greater exposure to problems and liabilities (for
example, making mistakes in expatriate assignments can
cost). The accumulated direct and indirect costs can be
huge.
• Additional responsibilities like translation of language,
both at headquarters and at the subsidiary level,
organizing schooling and housing for expatriates and
providing administrative services.
• Management of differential compensation due to variety
of allowances and adjustments.
• More emphasis on activities like international relocation
and orientation, both pre departure and post departure
cultural training.
IHRM Chapter 1

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• Knowledge of international taxation, rate of inflation and
cost of living, including currency fluctuation.
• Diversity management, like managing people from
different cultural and political backgrounds and gender
differences.
• More contacts with Government officials for obtaining
visas, work permits, tax certificates, fixing of meetings
and so on.
• More risk management as threats from terrorists,
Kidnappers and protecting intellectual property rights of
firms..
• More public relations work to enhance the multinationals
image and deal with human rights and other NGOs and
interest group operating in different countries.
IHRM Chapter 1

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Where subsidiary
may be located
Sources of labor,
finance and other
inputs
Where the firm
headquarter is
located
Dimensions of IHRM

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Sources of Employees for
International Assignments
HCNHCN
Host Country
Nationals (HCNs)
are workers
from the local
population
(local nationals)
Parent Country
Nationals (PCNs)
are employees
sent from the
home country
(expatriates)
Third Country
Nationals (TCNs)
are employees
from
a country other
than the parent &
host countries
PCNPCN TCNTCN
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IHRM Chapter 1
• Deployment in getting right skills to right place in organization
regardless of geographic location
• Knowledge & innovation dissemination & transfer where all
business units concurrently receive & provide information
• Talent identification & development of those employees with
abilities & skills to function effectively in global organization
• Managing International Assignment
• Employee and family adjustment
• Selecting the right person for a foreign assignment
• Culture differences
• language and communication
• Worldwide environment variation
Issues in IHRM
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IHRM Chapter 1
Significance of IHRM in International Business:
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Scullion (2001) outlined 10 major significance of IHRM in globally
business environment. This significance can categorized in 5 key
areas:

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IHRM Chapter 1
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IHRM Chapter 1
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Reading 14.1
Managing Global Workforce:
Challenges & Strategies
– Develop a careers for employees to provide rich contextual
knowledge of environments & cultures
– Provide specific awareness building assignments that develop
cross-sensitivity in high potential employees in short time
– Utilize expert SWAT teams deployed on short-term basis for
operational problems technical projects
– Adopt virtual solutions by using electronic communication
technologies to connect local employees to distant problems
Strategies for managing global workforce
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Strategic HR Issues in
Global Assignments
Reasons for International
Assignments
Reasons For International Assignments
• Position filling
Skills gap, launch of new endeavor, technology
Transfer
• Management development
Training and development purposes, assisting in
developing common corporate values
• Organizational development
Need for control, transfer of knowledge,
competence, procedures and practices

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Types of International Assignments
• Short term: up to 3 months
– Troubleshooting
– Project supervision
– A stopgap until a permanent arrangement is found
• Extended: up to 1 year
– May involve similar activities as short-term assignments
• Long term: varies from 1 to 5 years
– The traditional expatriate assignment
Types of International Assignments

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Non-standard Assignments
• Commuter assignments
• Rotational assignments
• Contractual assignments
• Virtual assignments
Some of these arrangements assist in overcoming the high cost of
international assignments but are not always effective substitutes for
the traditional expatriate assignment.
Non-standard Assignments

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Strategic HR Issues in
Global Assignments
1. Establish specific purpose for assignment
2. Select appropriate employee for assignment
3. Organizational & individual purposes for assignment must be
identified & matched
4. Assess adaptability to host culture of both employee & any
family members who will be accompanying employee
5. Provide appropriate training for employee & family members
6. Simultaneous training should be conducted for headquarters
staff
Strategic management of global
assignments

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