1. International Human Resource Management/Global HRM
Human Resource Management, 5E
International Human Resource Management/Global HRM
Prof. Hiteshwari Jadeja
Human Resource Management, 5E

2. What is International Human Resource Management(IHRM)?
The Human resource Management concepts and techniques employers use to manage the human resource challenges of their international operations

3. Intercountry Differences Affecting HRM
Cultural Factors
Economic Systems
Legal and Industrial Relations Factors
The European Union
Human Resource Management, 5E

4. Intercountry Differences Affecting HRM
Cultural Factors
Perceptions of “US” managers vs. other countries
Examples:
U.S. Managers are more concerned with getting the jobs done.
Chinese Managers are more concerned with maintaining a harmonious environment.
Hong Kong Managers fell between these extremes.
Compared to U.S. employees, Mexican workers expect managers to keep distance and be formal
When the workload increases, Australian and Singaporean firms add more staff while Korean and Japanese firms insist existing staff to work for longer hours.

5. Cont…. Economic Systems Difference in labor costs are substantial
Examples:
Some countries in Euro zone put more restrictions on the number on hours an employee can work.
Portuguese workers average about 1980 hours of work annually while German workers average 1648 hours.
Differences in labour cost are also substantial:
Compensation costs for production workers in Mexico is $2.75, in Taiwan is $6.43, in US is $23.82, in UK is $27.10, in Germany is $34.21
Workers in France can expect two and half days of paid holiday per full month of service. Germans get about 18 vacation days per year.

6. Cont….. Legal and Industrial Relations Factors The European Union
Examples:
U.S. Employment at will does not exist in Europe, where firing or laying off workers is usually expensive.
After expanding in Germany, Walmart discovered that Germany’s commercial laws discourage ads based on price comparisons. They soon left Germany.
The European Union
Must consult workers about certain corporate actions such as mass layoffs
In England, written statement is required about the details of the employment i.e. rate of pay, hours of work, etc.
Germany doesn’t require a written contract.

7. A Model of IHRM

8. What does IHRM add into the Traditional Framework of HRM?
Types of employees
HCNs
PCNs
TCNs
Human resource activities
Procurement
Allocation
Utilization of human resources
Nation/country categories where firms expand and operate
Host country
Parent country
Third country

9. Sources of Global Recruitment
Parent Country Nationals:
Citizens of the country in which the multinational company has its headquarters.
Host Country Nationals:
Employees of the company’s subsidiary who are the citizens of the country where the subsidiary is located.
Third Country National:
For eg: Mr. Akhil- an Indian citizen-is working for an American subsidiary in France. Mr. Akhil for the American subsidiary in France is called third country national.

10. The Advantages and Disadvantages of Using PCNs, TCNs and HCNs
Human Resource Management, 5E

11. Differences between Domestic HRM and IHRM
More HR activities
The need for a broader perspective
More involvement in employees’ personal lives
Changes in emphasis as the workforce mix of expatriates and locals varies
Risk exposure
Broader external influences

12. Human Resource Management, 5E
More HR Activities
Human Resource Planning
Difficulty in implementing HR procedure in host countries.
Difficulty in aligning strategic business planning to HRP and vice-versa.
Providing developmental opportunities for international managers.
Employee Hiring
Ability to mix with organisation’s culture.
Ethnocentric, polycentric or geocentric approach to staffing.
Selection of expatriates.
Coping with expatriate failures.
Managing repatriation process.
Training and Development
Emphasis on cultural training
Language training
Training in manners and mannerisms.
Human Resource Management, 5E

13. Human Resource Management, 5E
More HR Activities
Compensation
Devising an appropriate strategy to compensate expatriates.
Minimising discrepancies in pay between parent, host and third country nationals.
Issues relating to the re-entry of expatriates into the home country.
Performance Management
Constraints while operating in host countries need to be considered.
Physical distance, time difference and cost of reporting system add to the complexity.
Identification of raters to evaluate subsidiary performances.
Industrial Relations
Who should handle industrial relations problem in a subsidiary?
What should be the attitude of parent company towards unions in a subsidiary?
What should be union tactics in subsidiaries?
Human Resource Management, 5E

14. Cont’d More HR activities Tax equalization Relocation & orientation
Administrative services
Host government relation
Language translation
The need for a broader perspective
More than one national group of employees working.

15. Cont’d More involvement in employees’ personal lives
Schooling, housing
Banking, investment
Recreational program
Changes in emphasis as the workforce mix of expatriates and locals varies
As operations matures
Local staff availability
Taxation, relocation, orientation
Staffing, training & development

16. Cont’d Risk exposure Broader external influences Expatriate failure
Under performance
Higher cost of failure – direct & indirect
Terrorism
Broader external influences
Type of government
Developed / developing country

17. Basic Functions in International HRM
HRP
Recruitment and Selection
Training and Development
ORGANISATIONAL EFFECTIVENESS
Performance Management
Remuneration
Repatriation
Employee Relations
Human Resource Management, 5E

18. Human Resource Management, 5E
Six Key Issues in IHRM
Identifying top-management potential early.
Identifying critical success factors for future international managers.
Providing developmental opportunities.
Tracking and maintaining commitment to individuals in international career paths.
Tying strategic business planning to HRP and vice-versa.
Dealing with multiple business units while attempting to achieve globally and regionally focused (e.g. European or Asian) strategies.
Human Resource Management, 5E

19. The Expatriate Assignment Life Cycle
Crisis and Adjustment
Reassignment Abroad
Determining the Need for Expatriate or
Repatriation and Adjustment
Departure
Post-arrival Orientation and Training or
The Selection Process
Crisis and failure
Pre-assignment Training
Human Resource Management, 5E

20. Approaches to Staffing
Factors affecting approaches to staffing
General staffing policy on key positions at headquarters and subsidiaries
Constraints placed by host government
Staff availability
Ethnocentric
Polycentric
Geocentric
Regiocentric
IBUS 618 Dr. Yang

21. Ethnocentric Strategic decisions are made at headquarters;
Limited subsidiary autonomy;
Key positions in domestic and foreign operations are held by headquarters’ personnel;
PCNs manage subsidiaries.

22. Polycentric
Each subsidiary is a distinct national entity with some decision-making autonomy;
HCNs manage subsidiaries who are seldom promoted to HQ positions;
PCNs rarely transferred to subsidiary positions.

23. Geocentric A global approach - worldwide integration;
View that each part of the organization makes a unique contribution;
Nationality is ignored in favor of ability:
Best person for the job;
Color of passport does not matter when it comes to rewards, promotion and development.

24. Regiocentric Reflects a regional strategy and structure;
Regional autonomy in decision making;
Staff move within the designated region, rather than globally;
Staff transfers between regions are rare.
IBUS 618 Dr. Yang

25. Factors in Expatriate Selection
Technical Ability
Cross-Cultural Suitability
Family Requirements
Selection Decision
Individual Situation
Specific Situation
Country-Cultural Requirements
Language
MNC Requirements
Human Resource Management, 5E

26. Why Expatriate Assignments Fail
Personality
Personal intentions
Family pressures
Inability of the spouse to adjust
Inability to cope with larger overseas responsibility.
Lack of cultural skills
© 2005 Prentice Hall Inc. All rights reserved.

27. Reasons for Expatriate Failure
US Firms
Japanese Firms
Inability of spouse
Inability to cope with larger international responsibilities
Manager’s inability to adjust
Difficulties with the environment
Other family reasons
Personal or emotional problems
Manager’s personal or emotional maturity
Lack of technical competence
Inability to spouse to adjust
Human Resource Management, 5E

28. Culture Shock Cycle
IBUS 618 Dr. Yang

29. Helping Expatriate Assignment Succeed
Providing realistic previews of what to expect
Careful screening
Improved orientation
Cultural and language training
Improved benefits packages
© 2005 Prentice Hall Inc. All rights reserved.

30. Components of Expat Compensation
Human Resource Management, 5E

31. Compensating Expatriates
The “Balance Sheet Approach”
Equalize purchasing power across countries
Home-country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention.
The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country.
The employer then pays any differences such as additional income taxes or housing expenses.
© 2005 Prentice Hall Inc. All rights reserved.

32. Incentives Foreign service premiums Hardship allowances
Financial payments over and above regular base pay, and typically range between 10% and 30% of base pay.
Hardship allowances
Payments to compensate expatriates for exceptionally hard living and working conditions at certain foreign locations.
Mobility premiums
Lump-sum payments to reward employees for moving from one assignment to another.
© 2005 Prentice Hall Inc. All rights reserved.

33. Components of Effective Training
Cultural awareness programs
Preliminary visits
Language training
Practical assistance
Training for the training role
TCN and HCN expatriate training
Non-traditional assignments and training
IBUS 618, Dr. Yang

34. The Repatriation Process
Preparation
Physical Relocation
Repatriation Process
Transition
Re-adjustment
Human Resource Management, 5E

35. Human Resource Management, 5E
Thank You
Human Resource Management, 5E