Introduction

The competition among the businesses of the world is getting more and more complex. Everyone
is busy in making its system and structure the best and the most refined one. In this course of
aim, the most important thing that the businesses have to consider on is their workforce as one
can replace any of its assets like machinery, sites, and vehicles and so on but workforce is one
such asset that cannot ever be replaced.
The famous name of personnel management is human resource management. Since decades, it is
being studied and lots of researches have been made relating to this field. Generally we can say
that Human resource management or HRM provides the set of policies, strategies and processes
to manage the workforce in the best way so that to be competitive in market.
Now the latest trends, social, economic and political developments have contributed much in
changing the way the world works. The world economies are integrating and globalization is
continually increasing. Organizations prefer to expand their businesses via making international
trades that result in increased foreign direct investment.

International HRM
Though there is a vast research been done over HRM and there are already set policies and
strategies but now the organizations and firms are becoming globalized and thus there is a need
of enhanced planning too. The fundamental forces that are changing the working environment
are as follows:

Global Competition

Mergers, Acquisitions and Alliances Trend

Organizations Restructuring

Telecommunication and Technology advancements

Considering the above forces, there is also a new trend emerging in this same field of HRM and
that is International Human Resource management so that to manage the workforce according to
the changing works field and trends.
IHRM is the study of managing the international employees and designing such global
organization structure that facilitates the entire workforce and so that the multinational enterprise
may excel all around the globe.
Lots of researches are being made on the discussion of IHRM considering the changing modes of
working environments and the workforce. Now with the increasing trend of working only by
means of an internet and e-commerce, the need of IHRM has also been increased. Multinational
corporations have to deal with number of challenges and introduce new strategies and processes.
The main purpose of international human resource management is to enable the multinational
enterprises to be successful all around the world and as a definition of success it aims at:

Being competitive

Efficient

Locally responsive

Flexible and adaptable structure

Fast communication system

International Human Resource Management Functions

There are three main areas of IHRM that are:

Human Resource Orientation of MNCs

Allocation of Resources (Time, Energy and Money)

Location of Resources and Decision Making

There are different processes developed to come up with these functions perfectly. The basic
processes include planning of workforce, staffing, compensating, appraising, training and
development, time and transport management and workforce relationships at MNEs.
The IHRM organizational structure require the managers to develop a global mindset, foster
horizontal communication, make virtual and cross-border teams and consider international
assignments so that to broaden the organizational working.
In comparison to the traditional HRM, IHRM has

More heterogeneous functions

Rapidly changing perspectives

Involvement in personal lives of employees

External factors are more influential

More risks involved

Challenges for International Human Resource Management

The basic challenges that are somehow common between the traditional HRM and IHRM are
discussed below:

Recruitment and Selection: The recruitment and selection phase is one of the biggest
challenges faced by the international HRM. This requires detailed job descriptions and managers
must also apply competency models for the best fit selection. The manager must be aware of the
cultural differences and effective motivational rewards of any culture to make the recruitment
process successful.
Interviewing technique should be selected as according to the requirement. Manager needs to
evaluate that which process can help him or her best in choosing the right employee for the
organization.
Orientation Process: The early phase of the new employees is very important. It is the time that
can be best utilized to make the employees loyal to the company by giving pleasant impressions.
So orientation phase must be considered importantly. If any new entrant is from minority culture
then he must be given support to adjust well in the organization. For this purpose most of the
organizations secretly attach a person with new employee to boost his motivation and give
pleasant feeling regarding working environment. This will help the workforce to adjust well at
the multi-cultural environment.
Job Descriptions and Performance Evaluation Awareness: The management should provide
the new employee with detailed job description as usually there are differences at the job
responsibilities in different cultures for the same job. Therefore the employees must be provided
with complete information that what an organization requires from them. This will clear an idea
in their mind that on what basis their performance will be evaluated and thus no thought of unfair
means like favoritism will come to their mind.

Retention of Employees: The retention of employees at an international organization is even

bigger challenge as compared to in local organization. Because, manager needs to know about
the background of each employee as in multi-cultured organization every other employee has
different priorities. Therefore to facilitate employees, manager has to plan all of them
accordingly.
Considering the importance of International Human Resource Management, a conference is
being organized all over the world after every 2 years at different locations. Based upon this
conference number of journals are published. These come out to be really useful for the HR
managers working in MNCs or MNEs. Secondly the number of important aspects gets in notice,
related to international HRM at these conferences.
The key aspects that are yet to be answered are like culture role in MNCs or MNEs, will they
ever get converged or stay diverse at practices, what will be the strategic management after
increased size of MNCs and lastly but not the least the terrorism at the international market
cannot be ignored. The emerging economies of China, India and Eastern Europe must be
considered too.
Motivation
Motivation is an important concept that is vastly studied in the field of HRM and yet it is
important at IHRM as well. Motivation is the force that stimulates a desire within a person to
achieve an aim or goal. The strategies and policies developed for provoking motivation among
employees are not as it is applicable in case of IHRM. Because the employees are from different
cultures and nations so this issue needs to be dealt differently. Employees from different cultures
are motivated by different kinds of rewards so organization has to design unique policies for

their workforce. Similarly there are number of other concepts of HRM that cannot be universally
applied in case of IHRM.
Talent Management
Burbach and Royle conducted a research to determine the applicability of HRM talent
management concept to the international market of USA. They determined that there is a need of
top level support, political exchanges and internal policy consistency because the cultural issues
usually lead to divergence in talent management practices.
HR managers have to face different problems when working at MNCs because the structure and
policies for IHRM are yet not well developed. There is not clear picture available that what
choice a manager should make when dealing with international workforce and organization.
International Organizational Models
Like there are different models for the organizational structure available but it is difficult to
make a choice that which one is going to work well. Bartlett and Ghoshal in 1993 determined
four types of international organization models. They are as follows:

Decentralized federation

Coordinated federation

Centralized hub

Transactional

Workforce Diversity
The most important challenge for the IHRM is that how to manage the diverse workforce from
cultures at same workplace. There are many researches being done over this issue like Bendick,
Egan and Lanier conducted a research on the same issue in USA. They concluded that usually
the MNCs face discriminatory employment practices and arguments just because of this issue.
However for that they purposed a model to reduce the discrimination and increasing minority
representation in the company.
Though heavy research has already been done over these challenges and models have been
developed but still organizations need to consider the cultural underpinnings and current global
economic climate to get the solution for them. This is because; it has large effect over the
majority aspects of international human resource management.
In study of Hofstede (1980), he identified four dimensions that are influenced due to national
culture. They are as follows:

Individualism Vs Collectivism: The people from the culture of individualism give

preference to other people like family and friends whereas in the culture of collectivism,
people prioritize loyalty to their work.

Power Distance: the high power distance society people accepts high authority
difference among the employees at top and low positions whereas it is opposite in case of
low power distance societies.

Uncertainty Avoidance: The people of the society who can easily tolerate the
uncertainties are easy going for the organizations (low avoidance).

Masculinity and Femininity: The society where materialism and assertiveness is

preferred is referred as masculinity and relationships or welfare in case of femininity.

These four cultural trends lead to big challenges for the IHRM as they need to manage the
diverse workforce from different cultures where there cultural values must also be facilitated. By
means of research these dimensions constitute 8 culture clusters based upon location, language
and economic factor that represents different combinations. So obviously in such a case it is not
possible to design any particular model or follow specific practices but managers have to adopt
contingency approaches for IHRM.
Ouchi also made useful research on the cultural differences between the American and Japanese
workforce. He described that at the Japanese organizations, employees are offered a lifetime
employment whereas it is for short term basis in American Organizations. Japanese prefer to
induct from within whereas American recruit from outside. There are non specialized career
paths at Japanese organizations whereas specialized at American organizations. There is much
other dissimilarity among both the cultural organizations. Then Ouchi proposed a theory
according to which it was recommended that the American organizations can make few changes
which can attract Japanese to work with them as well. Later on the slogan of international human
resource management was accepted that says Think Globally and Act Locally which conveys
the main idea that balancing at control, coordination and autonomy is required for the
multinational companies.
In addition to the above challenges there are many others for the IHRM like International ethics
is one of top challenges for any international organization. The guest organization has to strictly
follow the culture of the host country. Therefore the organizations must plan each and every

aspect before taking their business on globe as there are higher risks involved in IHRM. In
addition to this any organization who is taking up its business internationally needs to consider
the latest technology as this would lag them behind if not kept up to date.
Secondly there are different labor laws and political climate in any country so the organizations
need to develop their policies as according to the host country laws. Organization has to pay its
employees as according to the laws defined. There is also different equal employment
opportunity laws defined for every country.
Thirdly there is a big issue of taxation for any international organization. Every country has its
own laws of taxation and thus organizations have to consider the tax equalization.

Global Economic Climate and IHRM:

Besides the intense global economic climate that is major forces in way of IHRM, there are
many organizations who are contributing well in improving the economic conditions. They are
applying great strategies to manage an international workforce in proper way. According to the
latest surveys, recession has made changes in some of the fields. Like automobile manufacturing,
IT services, and financial services sector has faced reduction in assignment volume at
international market. However there has been measured an increase in assignment volume in
fields of telecommunication and professional services firms.
IHRM researches are still under study but soon we can expect that they are going to make
positive changes in global economic climate too.

Conclusion
The complete discussion reveals that there are no set practices or processes yet developed for the
international organizations to excel at IHRM. However it is best to follow the Best practices
approach in order to meet the goals and overcome with the challenges.

References
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