International Human Resource Management

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					An Introduction to International Human Resource Management

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 blunders Hence need to understand human resource management in a global perspective

Why International Human Resource Management? (cont’d) The role of HR in International Operations Managing a Multicultural Workforce Developing Managerial Talent in a Global Business Environment


Globalization, Uncertainty, Complexity and IHRM Globalization and New Technologies

New Environment – Increased Environmental Uncertainty More Complexity More Dynamism Less Richness

Globalization and importance of IHRM
Uncertainty, Complexity, Hypercompetition

Need to Refocus on Persons, Roles and Integration for Global Performance HR

Capabilities People Processes Persons in Roles

Three Approaches to IHRM
• Cross-cultural management
 Examine

human behavior within organizations from an international perspective to describe, compare and analyze HRM systems and IR in different countries how HRM is practiced in multinationals

• Comparative HRM and Industrial Relations
 Seeks

• HRM in multinational firms
 Explore

Interrelationships between Approaches of IHRM


Diversity as an Organizational and HR Challenge in MNE

Source: Marilyn Loden and Judy B. Rosener, Workforce America: Managing Employee Diversity as a Vital Resource, p. 20.

A Definition of Human Resource Management

• Human Resource Management (HRM)
involves all management decisions and practices that directly affect the people who work for the organization. “Human Resources” the people who work for the organization.



A Definition of Human Resource Management (cont’d)
 “Human” represents the dimension of HRM which relates to the soft aspects such as commitment of employees through participation and the most important assets being the employees.  “Resource” represents the hard aspects such as the strategy link of HRM and the importance of efficient utilization of employees.  “Management” represents the role of HRM as part of management that implies that it’s not only an administrative function that carries out the formulated policies but also a managerial function that contributes to strategy formulation.

The General Field of HR
 Major Functions and Activities
– Human resource planning – Staffing
• Recruitment • Selection • Placement

– Performance appraisal – Training and development – Compensation and benefits – Industrial relations

Human Resource Management Functions
• Planning for Organizations, Jobs, and People
– The Strategic Management of Human Resources – Human Resource Planning

• Acquiring Human Resources
– Selection – Recruitment – Integration

Human Resource Management Functions (cont’d)
• Building and Motivating Performance
– HR Development – Performance Appraisal – Compensation Systems


Human Resource Management Functions (cont’d)
• Maintaining Human Resources
– Benefits – Safety & Health – Collective Bargaining – Organizational Exit – Employment transitions

• Multinational Human Resource Management

Strategic Decisions and Their Implications for Human Resource Management


Strategic Decisions and Their Implications for Human Resource Management (cont’d)


What does IHRM add into the Traditional Framework of HRM?
• Types of employees
– Within and cross-cultural workforce diversity – Coordination – Communication

• Human resource activities
– Procurement – Allocation – Utilization of human resources

• Nation/country categories where firms expand and operate
– Host country – Parent country – Third country

A Model of IHRM


Some Terms Defined
• Host Country National (HCN): Belongs to the Country where the subsidiary is located • Parent Country National (PCN): Belongs to the Country where the firm has its headquarters • Third Country Nationals (TCN): Belongs to any other country and is employed by the firm

What is an expatriate?
 An employee who is working and temporarily residing in a foreign country
• Some firms prefer to use the term “international assignees” • Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

 Global flow of HR: more complexity in activities and more involvement in employees' lives

International Assignments Create Expatriates:


The Expatriate Problem
• High Expatriate Failure Rates • Average cost per failure to the parent firm can be as high as three times the expatriate’s annual domestic salary plus the cost of relocation • Between 16% & 40% of all American employees sent abroad to developed nations, and almost 70% sent to less developed nations return home early

Reasons for Expatriate Failure
Inability of spouse to adjust Manager’s inability to adjust Other family problems Manager’s personal or emotional maturity Inability to cope with larger overseas responsibility 6. Lack of technical competence 7. Difficulties with new environment

1. 2. 3. 4. 5.

Differences between Domestic HRM and IHRM  More HR activities: taxation, culture orientation, administrative services  The need for a broader perspective: cater to multiple needs  More involvement in employees’ personal lives: adjustment, spouses, children  Changes in emphasis as the workforce mix of expatriates and locals varies: fairness  Risk exposure: expatriate failure, terrorism  Broader external influences: government regulations, ways of conduct

Differences between Domestic HRM and IHRM: variables
• Complexity involved in operating in different countries, varied nationalities of employees • The different Cultural Environment • The industry or industries with which the MNC is involved • Attitudes of Senior Management • Extent of reliance of MNC on home country domestic market

Variables that Moderate Differences between Domestic HR and IHRM


Forces for Change
• • • • Global competition: Growth in mergers, acquisitions and alliances: Organization restructuring: Advances in technology and telecommunication:


Impacts on Multinational Management • • • • Need for flexibility: Local responsiveness: Knowledge sharing: Transfer of competence:


Managerial Responses • Developing a global “mindset”: • More weighting on informal control mechanisms: • Fostering horizontal communication: • Using cross-border and virtual teams: • Using international assignments:


Factors that Influence the Global Work Environment


Approaches To International Human Resource Management

• Ethnocentric: Highly centralized. HQ controls PCNs dominate. • Polycentric: Decentralized. Each subsidiary has some degree of decision making autonomy. HCNs manage subsidiaries. • Geocentric: Ignores nationality in favor of ability and competence needs in a worldwide integrated business strategy.

Convergence or Divergence?
 Large corporations’ preference for consistent worldwide systems  Smaller companies’ desire for more professional systems  Need to follow local HRM laws  Development of unique techniques and practices to suit local cultural and legal requirements


Choosing an Approach to IHRM
• • • • • • Corporate International Strategy Political and Legal Concerns Level of Development in Foreign Locations Technology and the Nature of the Product Organizational Life Cycle Cultural Differences


Thank You