Birdseye view of International HRM, its moderating variables, factors for selection of Expatriate, Role of an expatriate, expatriate failure, Cultural conflicts and adjustments, IHRM practices, approaches to staffing subsidiaries, Performance management in IHRM and challenges

1. INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Prepared by
Ankush Shrivastava
MBA – HR
The Maharaja Sayajirao University of Baroda
Summer Intern at SCHAEFFLER

2. WHAT IS IHRM?
Simple definition is ‘the
process of managing
people in international
settings’
Scyllion (1995) defined
IHRM as ‘the HRM issues
and problems arising from
the internationalization of
business, and the HRM
strategies, policies and
practices which firms
pursue in response to the
internationalization process.
International HRM (IHRM)
is the process of:
• Procuring,
• Allocating, and
• Effectively utilizing human
resources
• In a multinational corporation,
while
• Balancing the integration and
differentiation of HR activities in
foreign locations

3. OBJECTIVES
To reduce the risk of international human resource
To avoid cultural risks
To avoid regional disparities
To manage diversified human capital.

4. TYPES OF ORGANISATIONS
International
Organization
• Domestic firms that
builds on its existing
capabilities to
penetrate overseas
market.
• Example : Honda,
General Electric,
P&G
Multinational
Organization
• MNCs have
operating units
(subsidiaries) located
in foreign countries
• Subsidiaries function
as autonomous units
• Examples : Shell,
Philips, Xerox
Global Organization
• Maintains control
over its worldwide
operations
(subsidiaries)
through a centralized
home office.
• They treat the entire
world as a single
market.
• Examples :
Matsushita
Transnational
Organization
• Provides autonomy
to independent
country operations
but bring these
operations together
into an integrated
whole through
networked structure
• Examples : Ford &
Unilever

5. DIFFERENCE BETWEEN DHRM & IHRM
INTERNATIONAL HRM
• Address a broad range of HRM activities
• HR issues relate to employees belonging
to more than one nationality
• Greater involvement of HR manager in the
personal life of employees
• Greater exposure to risks in International
assignments
• Has to manage several external factors
such as government regulations of foreign
country
DOMESTIC HRM
• Address a narrow range of HRM activities
• HR issues relate to employees belonging
to single nationality
• Limited involvement of HR manager in the
personal life of employees
• Limited risks in domestic assignments
• Limited external factors to deal with.

6. Variables that moderate differences between Domestic and
International HRM

7. WHO IS AN EXPATRIATE?
 An employee who is working and temporarily residing in a 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

8. International Assignments Create Expatriates

9. ROLES OF AN EXPATRIATE
Agent of
direct control
Agent of
socialization
Network
builder
Boundary
spanner
Language
node
Transfer of
competence
and
knowledge

10. FACTORS IN EXPATRIATE SELECTION
Technical
Ability
Cross-
Cultural
Suitability
Family
Requirements
Country
Cultural
Requirements
Language MNC
Requirements
Selection
Decision

11. EXPATRIATE FAILURE
• Definition: Premature return of an expatriate
• Now recognized that under-performance during an international assignment,
and retention upon completion, should be included
• Direct costs of failure: air fares, associated relocation expenses, and salary
and training
• Indirect costs (invisible)
1. Damaged relationships with key stakeholders in the foreign location
2. Negative effects on local staff
3. Negative effects on expatriate concerned
4. Family relationships may be affected

12. THE PHASES OF CULTURAL ADJUSTMENT

13. CROSS CULTURAL CONFLICTS
Reasons for Conflicts
▫ Corporate company Culture
▫ Ethnic Culture
▫ Attitude and Perception
▫ Motivational orientation
How to avoid Conflicts
▫ Good knowledge of foreign culture
▫ Respect of foreign culture
▫ Helpful steps in relationship to
foreign culture
▫ Initiative and Adaptability
▫ Ability of sensitive listening
▫ Ignore and minimize the cultural
differences
▫ Managing differences

14. IHRM PRACTICES
International
Staffing
Pre-departure
Training For
International
Assignments
Repatriation
Performance
Management
In
International
Assignments
Compensation
Issues In
International
Assignments

15. INTERNATIONAL STAFFING
Refers to the process of selecting employees for staffing
international operations of an MNC.
MNCs can be staffed using three different sources
a. Home country or Parent Country National (PCN)
b. Host Country Nationals (HCN)
c. Third Country Nationals (TCN)

16. PCN
• Employees of an organization who are citizens of the country in
which the headquarters of the company is located
HCN
• Employees of an organization who are the citizens of the country
in which the foreign subsidiary is located
TCN
• Employees of an organization who are the citizens of the country
other than the country where the organization is headquarterd
and the country that is hosting the subsidiary

17. APPROACHES TO STAFFING SUBSIDIARIES
Ethnocentric
Foreign subsidiary
has little autonomy.
All strategic
decisions are made
at the headquarters.
PCNs staff key
positions at quarters
as well as the foreign
subsidiary
Polycentric
Staff foreign
subsidiaries of the
firm with HCNs and
headquarters consist
of PCNs
Geocentric
Staff may be PCNs,
HCNs or TCNs
ability and not
nationality is the key
to staffing

18. PRE-DEPARTURE TRAINING FOR INTERNATIONAL
ASSIGNMENTS
• To make it easier for the employee to assume job responsibilities and be
effective in the foreign country as soon as possible
• To facilitate cultural adaptation as quickly and as effectively as possible
• 3 elements of T&D programme
1. Language training
2. Cultural training
3. Managing personal and family life

19. REPATRIATION
It is the process of bringing an expatriate home after he/she has completed the
international assignment.
Organizations can follow 3 practices
1. Create knowledge and develop global leadership skills
2. Ensure that candidates have cross-cultural skills to match their technical
abilities
3. Prepare people to make the transition back to their home offices

20. PERFORMANCE MANAGEMENT IN INTERNATIONAL
ASSIGNMENTS
Performance is the combination of several factors
• Compensation Package
• Task Assigned to the Expatriate
• Headquarter’s Support
• Environment
• Cultural Adjustment

21. COMPENSATING MANAGERS IN INTERNATIONAL
ASSIGNMENTS
• Home leave and travel allowances
• Children’s education allowance
• Currency differential payments
• Relocation allowance
• Housing allowance
• Cost of living adjustment
• Payments to protect from negative tax consequences
Components of expatriate compensation

22. MAIN CHALLENGES IN HRM
High failure rates of
expatriation and
repatriation
Barriers to women
in IHRM
International ethics
Language (e.g.
spoken, written,
body)
Different labour
laws, Different
political climate
Different stage(s) of
technological
advancement
Different values
and attitudes e.g.
time, achievement,
risk taking
Roles of religion
e.g. sacred objects,
prayer, taboos,
holidays, etc
Educational level
attained

23. CONCLUSION
• As organizations have gone global in their operations, the impact of cultural
differences as well as workforce issues have caught the attention of the HR
managers.
• As the world becomes boundary less, the ability to work in a cross cultural
environment becomes a valuable asset for any executive.
• Understanding, managing, and even exploiting these cultural differences
could well spell the difference between success and failure in several
business situations.

24. THANK YOU