Kirti Mankotia Singh

Module 1Broad overview of International Human Resource Management. Features, elements.Benefits and limitations. Domestic And International HRM.Factors influencing the global work environment

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International ImperativeWhy organizations expand internationally

To capture enhanced market opportunities that foreign countries may present

To achieve economies of scale in production and administration by expanding scope and volume of operations to international markets

Keeping up with industry leaders may require organization to enter foreign markets

Acquiring ownership of foreign-based organization or subsidiary.

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IHRM

IHRM is the interplay among the three dimensions-----

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HR activitiesHR activities

Types of Types of

employeesemployees

Countries Countries of of operationoperation

IHRMIHRM

•ProcureProcure

•AllocateAllocate

•UtilizeUtilize

•HostHost

•HomeHome

•Other/ThirdOther/Third

•HCNsHCNs

•PCNsPCNs

•TCNsTCNs

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Types of Human Resource in IHRM context

ExpatriatesCitizens of one country working in another

country.

Inpatriates Expatriates who are citizens of a foreign

country working in the home country of their multinational firm.

Human Resource TypesPCNs(1) Home-Country Nationals (Expatriates):

Expatriate managers are citizens of the country where the multinational corporation is headquartered

Sometimes called headquarters nationals

Most common reason for using home-country nationals (expatriates) is to get the overseas operation under way

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Human Resource Types

HCNs

Local managers hired by the MNCThey are familiar with the cultureThey know the languageThey are less expensive than home-country

personnelHiring them is good public relations

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TCNs

Managers who are citizens of countries other than the country in which the MNC is headquartered or the one in which the managers are assigned to work by the MNC

These people have the necessary expertise for the job

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HRPHRP

Recruitment and SelectionRecruitment and Selection

Training and DevelopmentTraining and Development

Performance ManagementPerformance Management

RemunerationRemuneration

RepatriationRepatriation

Employee RelationsEmployee Relations

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Basic steps in IHRMBasic steps in IHRM

Domestic HRM VS IHRM1. More HR activities: To manage the organisation in an international environment, the

conventional HR department which is performing domestically has to expand their activities to encompass certain new activities like-

International taxation International relocation and orientation Administrative services for expatriates Host government relations Language translation services

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Expatriates are subject to international taxation and often have both domestic and host country tax liabilities. Hence, the HR department has to work out tax equalisation policies to reduce botheration to the employees.

Host of other activities to be carried out by HR includes:1. Predeparture training in terms of cross-cultural issues and etiquettes2. Providing immigration and travel details3. Providing housing, medical care and schooling information for kids.4. Making the expatriate psychologically comfortable while relocating

them is also an important function of HR.

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2. Need for broader perspective: HR managers working in domestic environment generally function in

a single government scenario managing the employees of only the host country.

In multinational platform, the HR managers have to take a broader view of different international issues such as expatriate benefits and cross-cultural work dynamics in managing people.

Managing relationships with host government(s) in a number of countries around the world.

Compensation with reference to different currencies and fringe benefits.

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3. More involvement in employees’ personal lives:

High degree of personal involvement in the employees’ personal lives is necessary for the selection, training, placement and effective management of both PCN and TCN employees.

The role of HR department is to make the expatriate employees understand their housing, healthcare, work culture, compensation and all other matters so that they feel comfortable at the new place.

Many MNCs have their own international HR service section to take care of such type of activities. Whereas, in the domestic scenario, the HR department’s involvement with an employee’s family is limited to only providing employee insurance programs or at the time of transfer, providing assistance in relocating the employee.

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4. Emphasis changes as the workplace mix of expatriates and locals varies:

As international operations of companies gain experience, the emphasis put on the various human resource activities change.

For instance, with time, as the need for expatriates from the parent nation decreases, the resources previously allocated to areas like expatriate taxation, relocation and orientation are switched to activities like local staff selection and training programs.

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5. Risk Exposure:The consequences of failure in international operations are more

severe than the domestic business. The failure of an expatriate in terms of performance or his premature return from the assignment costs the company heavily and has tremendous impact over the market share and international customer relationship.

Another major risk factor that has emerged in the recent past is the threat of terrorism after september 11 tragedy in US. Most MNCs now consider this factor when deciding on international meetings and assignments more proactively to minimise the risk.

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6. More external influences:

The influence of the external factors such as different types of government, state of economy and business policies and practices of various host countries are quite high and therefore pose a great challenge for HR professionals to manage.

Depending upon the attitude of the govt. towards international firms in their country, the HR policies of the MNC can be changed. In terms of state of the economy, there are variations, like labour is more expensive and well organised in developed countries than in developing countries.

These factors demand that the HR manager should converge himself with the local business dynamics, code of conduct and business values.

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Moderating factors

Cultural environment.

Type of industry with which the MNC is primarily involved.

Extent of reliance of MNC on its home country market.

Attitude of the senior management.

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Factors that Influence the Global Work Environment

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