HRM in Global Perspective

Unit 1 : International HRM – an overview

• Meaning, Features, Objectives , Evolution of IHRM, Significance & Scope/ Functions
• Difference between International HRM AND Domestic HRM
• Approaches to IHRM- Ethnocentric, Polycentric , Geocentric and Regiocentric , Limitations to IHRM
• Qualities of Global Managers, Components of IHRM
• Managing Diversity in work force , Dealing with Cultural stock
Unit 2 : Global HRM Functions
• Recruitment & Selection, International Compensation, Training & Development, Performance Management, Motivation and
Reward System & International Industrial Relations
Unit 3 : Managing Expatriation and Repatriation
• Factors affecting, Role of Repatriate and challenges faced by Concepts of Parent Country Nationals, Third Country Nationals and
Host Country Nationals
• Expatriation : Meaning, Reasons , Factors, Limitations , Failure and Requirements of Effective Expatriate Managers
• Repatriation : Meaning, Process Repatriates
Unit 4 : International HRM Trends and Challenges
• Emerging Trends in IHRM
• International Business Ethics and IHRM, Managing International Projects and Team
• HR in MNCs, Role of Technology on IHRM, IHRM and Virtual Organization
• Growth in Strategic Alliances, Cross Border M & A, Impact on IHRM
• Knowledge Management and IHRM
Case Studies
 1. International HRM – an overview
Meaning of International HRM : It is the process of sourcing , allocating and effectively
utilizing human resources in a global business to achieve the stated objectives. IHRM includes
‘typical’ HR functions such as recruitment, selection, performance management, training and
development, and remuneration, however these are analyzed and/or managed at an international
level.
Globalization and the growth of information technology and the advancements in modern
business make the world to create and adopt new methods and concepts of human resource
management in the form of international human resource management (IHRM).
The purpose of IHRM is to get the competitive advantage by hiring and improving the skills,
efficiency, and productivity through the process of procuring, allocating, assigning, providing
training & development, performance appraisal, compensating for the effective utilization of human
resources in the global environment.
For this purpose HR Managers have to integrate HR Policies and practices across the
no. of subsidiaries spread over several countries so that organizational goals can be
achieved ,policies has to made sufficient flexible to allow significant differences in these
policies in different countries.
 • Developed by P V Morgan
• Three dimensions
a) HR Activities expanded into six ie HRP,
Staffing (recruitment, selection &
placement), performance management,
training and development, compensation
(remuneration, benefits and Industrial
relations)
b) Types of Companies : Parent country
where firm is head quartered
ii) Where subsidiary may be located.
iii) Source of labour , finance and other
inputs
c) Types of Employees
Features of IHRM :
1) Wide Scope : covers a greater no. of activities at International level.
2) More Knowledge : IHRM requires HR managers to have broader knowledge
3) Complexity : complex process of coordination & cooperation
4) Added responsibilities : HR managers to fulfill additional responsibilities for employees
5) Culture
6) Pressures of Globalization : interaction among countries to develop global economy.
7) Increased risk : to face terrorists risks , protecting intellectual property rights of the firm.
8) Public relations
Objectives of IHRM :
To ensure availability of Right People.
To effectively deal with Diverse workforce.
To provide job satisfaction.
To maintain standard of work life.
To remain competitive through out the world.
To decide on fair benefits and compensation.
To retain employees.
To fulfill International Legal Compliance
Importance of IHRM in International Business

• Cultural differences
• Availability of right people
• Job satisfaction & boosts employee
morale
• Emphasis on core competency
• Competition for human resources
• Stages of International involvement
• Need for Workforce empowerment
• Technological changes
Scope / Functions of IHRM
• Recruitment & Selection : New qualified
candidates for international operations.
• Training & Development : sufficient
training to fulfil organizational & their
own goals.
• Career Planning & Development :
sponsoring to visit conferences, external
skills training days and trade shows.
• Employee welfare : provision of safety
services, health services welfare funds,
social security and medical services in
international firms.
• Performance Appraisal
• Remuneration
• Fulfil International Legal compliance
• Labour relations : describes role of Mngt.
and workers in the workplace.
 • Ethnocentric Approach : In the Ethnocentric
approach, all key positions in the host country
subsidiary are filled by nationals of the parent
company.. The ethnocentric method is used when a
firm is opening a new branch in a new country, so it'd
be more accessible to the company's policies and
procedures to be transferred from the home country to
the new branch
An ethnocentric staffing policy is attractive when

✔ the firm believes there is a lack of qualified

individuals in the host country to fill senior
management positions.
✔ the firm sees an ethnocentric staffing policy as
the best way to maintain a unified corporate
culture.
✔ the firm wants to transfer knowledge of core
competencies to the foreign operation.
✔ To ensure that coordination and communication
are maintained adequately in head quarters.
 • Polycentric Approach: In this approach , the nationals of the host country are recruited for the
managerial positions to carry out the operations of the subsidiary company. The rationale behind this
approach is that the locals of the host country know their culture better and can run the business more
efficiently as compared to their foreign counterparts. Example MC’ Donalds.
Advantages of this approach :
1. Eliminates language problems for the employees and their family members, reduces cost on the awareness
training programs etc.
2. Even though high salaries may have to be given to attract HCN applicants but long term it is cheaper
compare to employing PCNs.
3. Employing HCNs is always better as they are more stable and can help in maintain the continuity in
managing subsidiaries more efficiently.
• Regiocentric Approach : These are regionally oriented organizations . The International staff is trfd
within the same region they work. Synergic benefits can be obtained by sharing functions across regions .
Regional managers
Advantages of this approach : 1 Allows interaction between executives trfd to regional headquarters from
subsidiaries in the region and Parent country National posted to the regional headquarters.
2. Less cost is incurred in hiring the natives of the host country.
The nationals of host country can better influence the decision of managers at headquarters with respect to the
entire region.
• Geocentric Approach : This approach seeks the best people for key jobs throughout the organizations
regardless nationality , most consistent with the underlying philosophy of a global corporation, unbiased ,
pools the right candidate from across the world.
Qualities of Global Managers :
▪ Self Awareness
▪ Vision : ability to set the path that others will follow.
▪ Sensitivity to Cultural diversity :
▪ Global strategic thinking : about managing business using
the best people from around the world.
▪ Flexibility : differences in standard approach, HR
Policies, flexible about application of global
standards and processes.
▪ Adaptability : depending upon the situation
/place
▪ Good Negotiator
▪ Effective management skills
Advantages : MNC’s can develop a pool of senior executives with international experiences and
contacts across the borders.
• The expertise of each manager can be used for the accomplishment of MNC’s objective as a
whole.
• Reduction in resentment, i.e. the sense of unfair treatment reduces.
• Shared learning, the employees, will learn from each other’s experiences.
Components of International HRM

Cross Cultural Management : It helps an organization to deal

with people coming from different cultural backgrounds. In the
organization people come from various class, caste, gender, religion,
and nationality. Work teams considers the differences in cultures,
practices and preferences of consumers in a International business
context.
Features : CCM describes OB within countries , cultures and improve
interaction of co-workers, managers, executives, clients suppliers etc.
✔ It helps managers to cope with employees of foreign cultures.
✔ Forms the basis of development of intercultural training measures.
✔ Helps to decide the incentive system and compare whether it is
effective for group in a specific culture.
✔ Helps the managers to be proactive and anticipate the
environmental differences which could lead to problems when MNEs
attempt to introduce worldwide standardized HRM practices.
Role of IHRM in Cross Cultural Management :
• Competition : Global market provides more opportunities but also
creates fierce competition, so better survival in international Cos
have to promote and strengthen themselves internally.
• Cost : cost of the people is the largest single item of the operating
cost , needs to be controlled . Need to see cost – benefit equation.
• Work relationship : IHRM Managers has to know how to manage the harmonious working
relationship between expatriates and local employees of that particular country by analysing
problems.
• Organizational Structure : imp. For making decision relating of management of people ie their
recruitment, job rotation, job description training and their remuneration etc.
• Communication : cross cultural communication imp for both local and international operations. It
helps to run the business more effectively and successfully .
• Work culture : plays an imp role in bringing the best out of employees and making them more
loyal to the organization for a longer period.
• Conflict Management : primary requisite to eliminate conflicts among the employees for the
interest of the organisation. Conflicts may arise mainly arise because of personal goals vs
organisational goals, personal ethics vs organisational ethics, rights vs duties etc.
• Technology : Rapid developments in technology, communication network , computing capabilities
have changed the communication within and among the organisational settings.
Comparative HRM : Analytical rather than descriptive, systematic investigation of HRM practices
in two or more countries to increase knowledge and understanding.
Comparative Human Resource Management focuses on specific countries, areas within the
country, or different regions of the world. Countries usually possess different political and economic
systems, employment, education laws, labour markets, as well as cultural expectations; therefore,
all these issues should be taken into account to apply HRM policies and systems.
 Concept of Workforce Diversity Management: Managing workforce diversity implies creating an
organizational climate in which a heterogeneous workforce performs to its best potential; without
the organization favouring /dis-favouring any particular segment of workforce with a view to
facilitating the best attainment of organizational goals.

Features of Workforce Diversity Management:

(i) Workforce diversity management requires creation of an organizational climate, in which people from
different cultural, social backgrounds and being diverse in many other respects (e.g. age, gender, education
etc.) can co-exist and work, with full co-operation of one another.
(ii) Workforce diversity management aims at making people work to the best of their potential.
(iii)Workforce diversity management rules out any discrimination among people, in any respect, whatsoever.
(iv)Work-force diversity management is expected to work towards the best attainment of organizational
goals.
Ways to manage diversity : Understand discrimination : HR Manager should have knowledge
legislation and penalties to deal with different people depending upon situation to reduce no. of conflicts
and behavioural issues.
✔ Equal treatment : Personnel policies from hiring to promotions should be based on employee
performance.
✔ Create an Empowered atmosphere : HR Manager should welcome diverse skill set and should work as
team.
✔ Provide Orientation : To make new employees familiar with the
company, its operation and present workforce.
✔ Fairness in hiring : It should be on the basis of qualification and
quality of experience and not on age or any other category.
✔ Handle complaints effectively : all complaints of favouritism or
discrimination should be treated seriously.
✔ Invest in Diversity training : periodic session of training for the
entire staff on the benefits of diversity in the workplace. Also
should encourage discussions at these meetings.
Culture shock : refers to feelings of uncertainty, confusion, or
anxiety that people may experience when moving to a new country
or experiencing a new culture or surroundings. This cultural
adjustment is normal and is the result of being in an unfamiliar
environment.
This concept becomes very important in companies which sends its
executive on foreign deputation for considerably long period. It is
part of international human resource management practices.
When employees are sent on foreign deputation, culture shock
happen in two important ways as follows
• When employees are sent to new culture (Expatriation)
• When employee goes back to the own culture which he had left
(Repatriation)
• Reverse culture shock : It is the
emotional and psychological distress suffered
by some people when they return home
after a number of years overseas.
This can result in unexpected difficulty in
readjusting to the culture and values of the
home country, now that the previously familiar
has become unfamiliar.
In a business context, globalization has
resulted in more and more employees being
sent on lengthy assignments to other
countries.
The longer the time spent abroad and the
bigger the cultural difference, the greater the
reverse culture shock.