module 1 class

8/12/2019 Module 1 Class

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An Introduction to International Human

Resource Management

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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 Resourcesthe people who work for the

organization.

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A Definition of Human Resource Management

(contd)

Humanrepresents the dimension of HRM which relates to thesoft 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 its not only an administrative

function that carries out the formulated policies but also a

managerial function that contributes to strategy formulation.

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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

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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

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(contd) Building and Motivating Performance

HR Development

Performance Appraisal Compensation Systems

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(contd)

Maintaining Human Resources

Benefits

Safety & Health Collective Bargaining

Organizational Exit

Employment transitions

Multinational Human Resource Management

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International Imperative

Why 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 ofoperations to international markets

Keeping up with industry leaders may require

organization to enter foreign markets

Acquiring ownership of foreign-based organization orsubsidiary

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Reasons for emergence of HRM

Increasing globalization, firms and employees in them

moving all over the world.

Managing a Multicultural Workforce

Developing Managerial Talent in a Global BusinessEnvironment

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International HRM requires

Managing broader range of functional areas

Becoming more involved in employees personal lives

Setting up several different HRM systems for different

geographic locations

Dealing with more complex external constituencies

Participating in international assignments that have

heightened exposure to personal risk

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Globalization, Uncertainty, Complexity and

IHRM

Globalizationand

New Technologies

New EnvironmentIncreased Environmental Uncertainty

More ComplexityMore Dynamism

Less Richness

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Globalization and importance of IHRM

Uncertainty, Complexity, Hypercompetition

Need to Refocus on Persons, Roles and Integration for Global

Performance HR

Capabilities

People ProcessesPersons in Roles

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Three Approaches to IHRM

Cross-cultural management

Examine human behavior within organizations from an

international perspective

Comparative HRM and Industrial Relations Seeks to describe, compare and analyze HRM systems and IR

in different countries

HRM in multinational firms

Explore how HRM is practiced in multinationals

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Interrelationships between Approaches of

IHRM

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Diversity as anOrganizational and

HR Challenge in

MNE

115Source: Marilyn Loden and Judy B. Rosener, Workforce America: Managing Employee Diversity as a Vital Resource, p. 20.


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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

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IHRM Defined

Morgan defines IHRM as the interplay among thethree dimensions of human resource activities, types

of employees and countries of operation.

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A Model ofIHRM

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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

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Who is an expatriate?

An employee who is working and temporarily residing ina 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

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Inpatriate Transfer of subsidiary staff into the parent country (HQ)

operations

foreign manager in the US

An expatriate in the US where US is the host country and

the managers home country is outside of the US

Inpatriate is also defined as an expatriate.

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International Assignments Create Expatriates:

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The Expatriate Problem

High Expatriate Failure Rates

Average cost per failure to the parent firm can be as high as

three times the expatriates 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

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Reasons for Expatriate Failure

1. Inability of spouse to adjust

2. Managers inability to adjust

3. Other family problems

4. Managers personal or emotional maturity5. Inability to cope with larger overseas responsibility

6. Lack of technical competence

7. Difficulties with new environment

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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 expatriatesand locals varies:fairness

Risk exposure: expatriate failure, terrorism

Broader external influences: government regulations, ways

of conduct

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Variables that Moderate Differences between

Domestic HR and IHRM

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Factors that Influence the Global Work Environment

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Forces for Change

Global competition

Growth in mergers, acquisitions and alliances

Organization restructuring

Advances in technology and telecommunication

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Impacts on Multinational Management

Need for flexibility Local responsiveness

Knowledge sharing

Transfer of competence

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Managerial Responses

Developing a global mindset Fostering horizontal communication

Using cross-border and virtual teams

Using international assignments

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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

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Approaches to IHRM Matching Model

Harvard Model

Contextual Model

5P Model

European Model

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Matching Model

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OrgnStructure

HRM

Mission&

Strategy

EconomicForces

CulturalForces

PoliticalForces


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The Harvard Model

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The Harvard Model Stakeholder interests - shareholders who have a

financial interest in the business

Externally, the government also has an interest in howorganisations operate; this includes legislation toensure that people are protected and to monitor howthe organisation contributes to the economy.

Unions may also have an interest in the organisation

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The Harvard Model Situational factors - characteristics of the workforce,

which in turn include labour markets, unionrepresentation, laws and societal values

economic conditions, strategic issues as to thedirection of the organisation,and the managementphilosophy that drives the organisation

These lead to the HRM policy choices of employeeinfluence, human resource flow, reward systems andwork systems

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The Harvard Model HR outcomes - concerned with commitment,

competence, congruence and cost-effectiveness.

Long-term consequences - refer to individual well-being. Will the outcomes ensure that individuals arelooked after and their needs considered?

Will the organisation still be able to be effective and

compete or provide a service in the external market? How will the HR outcome satisfy the wider needs of

society and the community as a whole?

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Contextual Model

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5 P Model

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European Model

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International ContextEg. European Union

National HRM ContextIncludes:Education/training

Labor marketsTrade unions

Industrial Relations etc

National ContextIncludes:

Culture,Political/legislative

EconomicSocial

Patterns of ownership etc

Corporate Strategy

HRM StrategyIncludes:

IntegrationDevolvement to line

Employment, Involvement,reward policies

Work systems etc

HRM PracticeIncludes:Selection, performance,

appraisal,Rewards, developmentIR, communication etc


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Assessing Culture:

Hofstedes Cultural Differences Dimensions Geert Hofstede - Dutch management researcher

Gathered data from 100,000 IBM employees

Surveyed workers from 50 countries and 3 regions

Concluded that there are five dimensions used to

differentiate and rate cultures

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1) Individualism v/s CollectivismThis dimension refers to how people define themselves

and their relationships with others

Individualism

Believe individual is important

Stress independence over dependence Reward individual achievement

Value uniqueness of individual

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Individualism v/s Collectivism (cont)

Collectivism

Views, needs and goals of the group are most

important Obligation to the group is the norm

Self is defined in relation to others

Focus on cooperation, not competition

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2) Uncertainty avoidance

the extent to which people in a culture feel threatened by

uncertain or unknown situations.

High Uncertainty Avoidance

Avoid ambiguity

Strict codes of behavior Belief in absolute truths

People with high uncertainty avoidance have an inner

need to work hard, and there is a need for rules,

precision, and punctuality.

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Uncertainty avoidance (cont) Low Uncertainty Avoidance

Accept ambiguity and lack of structure

More inclined to take risks and think outside thebox

Rules are rejected or ignored

Employees work hard only when needed, there are no

more rules than are necessary, and precision and

punctuality have to be learned

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3) Power Distance

the way the culture deals with inequalities High Power Distance

Power is centralized

Natural and inevitable

In the high power distance workplace, superiors and subordinate

consider each other existentially unequal.

Cultures with high power distance have power and influence

concentrated in the hands of a few rather than distributed throughout

the population.

These countries tend to be more authoritarian and may communicate in

a way to limit interaction and reinforce the differences between people.

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Power Distance (cont) Low Power Distance

Minimal power differences

Superiority not rigidIn the low power distance workplace, subordinates

expect to be consulted, and ideal bosses are

democratic. In more democratic organizations, leaders

are physically more accessible.

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4) Masculinity v/s Femininity

womens social role varied less from culture to culture

than mens. Masculinity

Strive for maximum distinction between what menand women are expected to do

More value is attached toassertiveness, competition

and material success

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Masculinity v/s Femininity(cont) Femininity

Fewer rigid gender roles

Men and women are more equal Interpersonal relationships

Quality of life

Concern for the weak

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5) Long-term v/s Short-term orientationConfucian work dynamism

Long-term orientation

Thrift

Savings Perseverance towards results

Willingness to subordinate oneself for a purpose

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Long-term v/s Short-term

orientation(cont) Short-term orientation

Consistent with spending

Less savings Preference for quick results

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Etic and Emic approach to cultureEtic Emic

General view Specific view

Focuses on previously developedconstructs or concepts

Focuses on particular meaning given bya specific group of individuals

Individualism Collectivism are etic TQM is emic

Positivist approach Interpretive approach

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Approaches To International Human Resource

Management

Ethnocentric: Exporting organizations home country

practices and policies to foreign locations

Polycentric: Allowing each location to develop own

practices and policies

Geocentric: Developing one set of global practices and

policies applied at all locations

Regiocentric : Developing standardized practices andpolicies by geographic region

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Challenges of IHRM

1. Crosscultural communication and diversity

2. Global knowledge management

3. Local and global sustainability

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1)Crosscultural communication and diversity

Desirability of achieving one organizational culture

Varied cultural perspectives that can accurately reflectthe issues of homogeneity and heterogeneity

Mergers and Acquisitions arising out of over capacity

in the industry

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1) Crosscultural communication and diversity

(cont)Alvessonsframework

Culture must be viewed in four different ways

1) Unitary and unique organization culture

2) Organizations as meeting points of fields of culture

3) Local subcultures

4) Ambiguous cultural configurations

Informed and comprehensive insight intoorganizational culture

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2) Global knowledge management

Knowledge Management faces both moreopportunities and obstacles in the global environment

Knowledge creation and Knowledge transfer strategies

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Global knowledge management Four knowledge management strategies (Krogh et al):

Leveraging strategyCommunicate and transfer

existing knowledge within your organization

Expanding strategyCreate and build on existing

knowledge

Appropriating strategyTake new knowledge from

external individuals and organizations and transfer it toyour organization

Probing strategyCreate new, proprietory knowledge

from your internal organizational resources

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3) Local and global sustainability

Global and Local economies are in a constant state ofchange and flux

Notable country differences

Some industries remain more PCN dominated Banking, Commodity Broking, Printing andPublishing.

Strategies to achieve global integration (globalstrategy) , local responsiveness (multi domesticstrategy)

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3) Local and global sustainability

Achieve highly globally integrated and highly locallyresponsive

Major challenge is to raise the professionalism of

IHRM so that it can fulfill a more responsiblecontribution to organizations and society

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Organizational processes that influence

IHRMInter culturalcommunication

Motivationacross cultures

GlobalLeadership

Decision makingin global context

Communicationbetween

individuals fromdifferent cultures

Individualdimension

Maslows needhierarchy theory

How the leadersadapt the

leadershipconcepts to localconditions andwork situations

Decision makingbecomes culturally

contingent inglobal context

Precise perceptionof not only what isconveyed in theverbal mode, butin the non verbalas well

Team dimension Self awareness, selfregulation,empathy isimportant

Construction ofalternatives is veryimportant

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Thank You

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