3. Definition
3
• The process of procuring, allocating and
effectively utilising human resources in an
international business is called international
human resources management (IHRM).
Need for IHRM
• Managing expatriates
• Globalization has forced HRM to have
international orientation
• Effectively utilise services of people at both the
corporate office and at the foreign plants
4. Model of IHRM
4
• Procure
HR
Activities
• Utilise
• Allocate
• Home country
nationals
Types of • Host country
employees nationals
• Third country
nationals
• Home country
Countries • Host country
• Third country
5. Characteristics of IHRM
5
More HR activities
Need for a broader perspective
More involvement in employee personal
lives
Changes in emphasis as the workforce
mix of expatriates and locals vary
Risk exposure
More external influences
6. More Human Resource
6
Activities
Human • Difficulty in implementing HR in host
countries
Resource • Developmental opportunities for
Planning international managers.
• Ability to mix with organisation’s culture
Employee • Ethnocentric, polycentric or geocentric
staffing approach
Hiring • Selection of expatriates
• Managing repatriation process
• Emphasis on cultural training
Training & • Language training
Development • Training in manners &
mannerisms
7. • Devising an appropriate strategy to
compensate expatriates
• Minimising difference in pay between
7 Compensation parent, host & third country nationals
• Issues relating to the re-entry of expatriates
into the home country
• Constraints while operating in host
countries need to be considered.
Performance
Management • Physical distance, time differences &
cost of reporting system add to the
complexity.
• Handling industrial relations problems in
a subsidiary.
Industrial
Relations • Attitude of parent company towards
unions in a subsidiary
8. Need for Broader Perspective
8
Pay issues
• Different countries, different currencies
• Gender based pay in Korea, Japan, Indonesia
Health insurance for employees & their families
Overtime working – Korean & Japanese firms
Promotions based on seniority or merit
9. More Involvement in
Changes in Emphasis
9
Employee’s Personal Lives
More involvement for both Need for parent-country
parent-country & third- & third-country nationals
country nationals decrease as more
Housing arrangements trained locals become
Health care available.
Remuneration packages Resources reallocated to
Assist children left behind in selection, training &
boarding schools
management
10. 10
• Physical safety of the employees.
Risk
• Failure of expatriates to perform well
Exposure financial losses to the firm
• Dealing with ministers, political
figures, economic & social interest
External groups
• Hiring procedures dictated by host
Influence country.
• Catch up with local ways of doing
business.
11. Reasons for Growing Interest in
11
IHRM
Effective HRM
Globalisation of determinant of
Business success in
international business
Movement to network
Significant role in
organisations from
implementation &
traditional hierarchical
control of strategies
structures
12. Basic Steps in IHRM
12
HRP
Recruitment & Repatriation
Selection
Employee
Relations
Training & Development
Performance
Management
Remuneration
13. Recruitment & Selection
13
Ethnocentric Approach Polycentric Approach Regiocentric Approach Geocentric Approach
• Key • Host-country • Variation of
management nationals hired staffing policy to • Seeks best
positions held to manage suit particular
geographic areas people for
by parent- subsidiaries key
country jobs, irrespe
nationals • Provides a
• Parent-country 'stepping stone' ctive of
nationals for a firm wishing nationality
• Appropriate occupy key to move from an
during early positions at ethnocentric or
phases. corporate HQ. polycentric • Underlying
approach to a principle of a
geocentric
approach global
corporation
3 categories of employees can be hired – parent country nationals
(PCNs), host country nationals (HCNs) & third country nationals (TCNs)
14. Advantages & Disadvantages of
14
Using PCNs
Advantages Disadvantages
Familiarity with home
Difficulty in adapting to foreign country
office, goals, practices
Excessive cost of selecting, training &
Easy organisational control maintaining expatriates
& coordination
Promotional opportunities limited for
International exposure to HCNs
promising managers
May try to impose inappropriate HQ
PCNs special skills & style
experiences
Compensation differences for HCNs &
PCNs
15. Advantages & Disadvantages of
15
Using HCNs
Advantages Disadvantages
Familiarity with the situation in Difficulty in exercising effective control
over the subsidiary’s operations
host-country
Lower hiring costs
Communication problems with home
office personnel
Locals motivated due to
promotional opportunities
No opportunity for home country’s
Responds well to localisation of
nationals to gain international
subsidiary’s operations experience
No language barrier
Limited career opportunity outside the
HCNs stay longer in positions
subsidiary
16. Advantages & Disadvantages of
16
Using TCNs
Advantages Disadvantages
Salary & benefit Host country govt. may
requirements lower than resent hiring TCNs.
that of PCNs.
May not return to their
May be better informed country after assignment.
about host country
environment.
Host country’s sensitivity
w.r.t nationals of specific
Truly international managers countries
17. Expatriate Assignment Life
17
Cycle
Determining the
Crisis & Reassignment
need for an
Adjustment Abroad
expatriate
Repatriation &
Post-arrival
Adjustment
Departure Orientation &
Training
Selection Pre-assignment Crisis &
Process training Failure
18. Expatriate Failure
18
Premature return of expatriates to their home
country
Reasons
• Inability to adjust to host country culture leads to culture
shock
• Personal & emotional problems
• Difficulties with the environment
• Inability to cope with larger international responsibilities
• Other family reasons
19. Training & Development
19
Cross
Language
Cultural
Training
Training
Management
Practical
Development
Training
& Strategy
20. HCN Training
20
Gaining
Technical know-
knowledge about
how specific to
parent
organisation
organisation
General
Role of the
awareness of the
subsidiary in the
parent country
MNC
cultural norms
21. Repatriation
21
The activity of bringing Preparation
the expat back to the
home country
Can cause re-entry Physical
Relocation
shock or reverse
culture shock
Reasons Transition
Posting period over
Children’s education
Not happy with
Readjustment
overseas assignment
Failure to do a good job