International human

resource management
Bharathi Sunagar
 Module 1
Definition
Drivers of internationalization of business
Different setting of IHRM
Development of IHRM
Difference between IHRM & HRM
Models of IHRM
IHRM Strategies
SHRM
Culture
How the world is changing,
Importance of globalization,
What are reasons that encouraged global
organizations to develop international
HR strategies?
Global competition and differences in
organizational environment across nations.
Increasing Importance of Global
Human Resources Understanding

International
Mergers and
Acquisitions

Importance of
Foreign
Global Human Global
Human Resources Competition
Resources Management

Market
Access
Opportunitie
s
Impact of globalisation on the
nature of work
Outsourcing to low labor countries
First manufacturing, then processing
services, now white collar work.
 Drivers of internationalization of
business
Trade agreements
Search of new markets and reduced costs
Rapid and extensive global communication
Rapid development and transfer of new technology
Improving global education and global talent pool
Increased travel and migration
Knowledge sharing
E commerce
Homogenization of culture and consumer demands
The growth and spread of
internationalization
------The story
 Integration of markets
Reaching the world faster, farther, cheaper, deeper
Interaction, interconnectedness, integration of people
International business growth
FDI
UN -2010- 82000 large MNE 810000 companies
employ 77 million worldwide
BRIC countries major emerging markets
Not only large companies of developed countries but
enterprises from developing countries are contributing
to global trade
World is becoming flat
Everyone competing with everyone from everywhere for
everything
Fortune magazine- top 20 companies, most powerful
women, fortune 500
Questions for HR
professionals
Do we have a strategy for becoming an international
firm?
What type of managers will we need to be successful?
How can I find out about the way that HRM is
conducted in other countries (laws, trade unions, labor
market).
What will be the impact of cultural norms on our HR
policies.
How will we choose employees.
How do we move people to different locations
How do we manage transfer of knowledge across
borders
 An expatriate (often shortened to expat) is a
person temporarily or permanently residing, as an
immigrant, in a country other than that of their
citizenship. The word comes from the Latin terms
ex ("out of") and patria ("country, fatherland"). In
common usage, the term is often used in the
context of professionals or skilled workers sent
abroad by their companies.
Repatriation is the process of returning a person
to their place of origin or citizenship. This includes
the process of returning refugees or
military personnel to their place of origin following
a war. It also applies to diplomatic envoys and
international officials in time of international crisis
as well as expatriates and migrants.
 1. PCN (Parent-country nationals) are employees whose
nationality is the same as that of the firm headquarters
for example, a German employee of a German
company who is working at a Chinese subsidiary.
2. HCN (Host-country nationals) are employees who have
the same nationality as the local subsidiary. This could be
a Chinese employee working at the Chinese subsidiary of
the German company
3. TCN (Third-country nationals) are employees whose
nationality is different from that of either the
headquarters or the subsidiary office. In the above
scenario, this might mean an Indian employee working at
the Chinese office of the German company.
 Key Issues in International
HRM
1. Worldwide Human Resources Planning
Recruiting and Selection
Expatriate orientation and training
Repatriation
Performance appraisal
2. Compensation
Dealing with inflation and unexpected
changes in exchange rates
Providing sufficient pay to keep individuals
Should company pay hardship allowance?
Dissatisfaction with cost of living allowances
3. Housing (Complex problems at home and
overseas)
Key Issues in International
HRM
4. Benefits Planning
Developing equity among employees
Several plans necessary for different categories of
personnel
5. Taxation (Proliferation of new laws)
6. Communication of HR Policies and Programs
Worldwide
Treat communication as a continuous process
Face-to-Face contact frequently
Make policy manuals brief and simple
Be sensitive to needs of receiver
Send regular written explanations of policy changes
Periodic rotation of overseas HR managers desirable
Security
 Different setting of IHRM
Headquarters of multinationals
Home country subsidiaries of foreign
owned firms
Domestic firms
Government agencies and non
governmental organizations
 Difference between IHRM & HRM

More HR functions & activities

A broader expertise and perspective
More involvement in people lives
Dealing with and managing a much wider mix
of employees
More external factors and influences
Greater level of risk
Global dispersion
Multiculturalism
Different legal and social systems
DIFFERENCES BETWEEN IHRM &
DOMESTIC HRM
IHRM
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.
 Evolution of IHRM professional

Research area of interest

Professional bodies
IHRM service providers
Certification courses
SIHRM
INTERNATIONAL HUMAN RESOURCE
MANAGEMENT
Simple definition is the process of managing people in
international settings
The study and application of all HRM activities as they impact
the process of managing HR in enterprises in global
environment.
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
IHRM is the management of HR in business operations in
atleast two nations
 International Human Resource
Management is the procurement,
allocation, utilization, and motivation
of human resources in international
business.
 SIHRM

Basic elements of strategic

management
Vision, mission, goalsprocess
 Evolution of MNE
Stage 1
 Auxiliary methods of
internationalization
Outsourcing
Off shoring
The born global firm
Types of firms
MNE business strategy

High
Integrat
ion

Low

Low High
Local
Responsiveness
 Types of Organizations

Transnational
Global
Specialized facilities
Views the world as a
permit local
High single market;
responsiveness; complex
operations are controlled
coordination
centrally from the
mechanisms provide
Integratio corporate office.
global integration.
n
Multinational
International
Several subsidiaries
Low Uses existing
operating as stand-alone
capabilities to expand
business units in
into foreign markets.
multiple countries.

Low High

Local Responsiveness
 Headquarters international
orientation & MNE Business Strategy
Ethnocentrism
Poly centrism/ Regio centrism
Geo centrism
 IHRM Strategies

High
Integrat
ion

Low

Low High
Local
Responsiveness
 Models /Inter-unit
Frameworks
IHRM issues
linkages: Control/
in
IHRM variety

Exogenous
factors Internal operations: Local MNE
Industry Sensitivity/ strategic fit Concerns &
Charecterstics
Goals
Country / regional
characteristics
Competitiven
Strategic MNE ess
Components IHRM Functions Efficiency
Inter unit linkages Local
Internal operations Orientation responsivenes
Endogenous Resources s
Factors Location Flexibility
Structure Learning &
Headquarters transfer
Experience in
IHRM Policies/ Practices
managing
international
Staffing
operations Appraising
Compensating
 Culture
Nature & importance of culture
At Least some variances
Complex & difficult in conducting
business
Variances in people beliefs, values &
behavior patterns
IHR Managers to cope with international
responsibilities
 Definition and description
Culture is a characteristic way of behaving &
believing that a group of people have
developed over time & share in common.
Groups culture:
Gives sense of belongingness
How should they behave?
Provides capacity to adapt transmit knowledge to
new employees
Affects every aspect of the management process-
how people think, solve problems, make
decisions
 Understanding culture as layers of
meaning

Surface
Dress
Culture Gestures
Hidden
Food
Culture
Core/
Values Etiquette
Invisible
Universal
Truth Philosophi
es
Ways of eating Religio
n Body Language

Architecture
Country & Regional
Cultures
Country & Regional Cultures
Research of Geert Hofstede- IBM- 53
Countries- Focused on country differences and
regional similarities based on work related
factors
Research of Fons Trompenaars- Royal Dutch
shell- 1500 employees 50 countries- how
different cultures accord status to members of
their cultures, the varying attitudes toward
time & nature & differing attitudes towards
individuals & groups & resulting relationships
between members of socety
 Country Culture Clusters
Anglo
Arab
Far eastern
Germanic
Latin American
Latin European
Near Eastern
Nordic
Independent
 The observations of experienced
practitioner
4 Patterns
Deal focus vs Relationship focus
Informal vs formal cultures
Rigid time [monochronic] vs fluid
time [polychronic]
Expressive vs reserved cultures
 Issues
Country culture Vs MNE Culture
Cultural convergence and divergence
General frustrations
Forms of IHRM Research
Basic assumptions
Specific difficulties
The particular focus of researcher- Emic & Etic
Language problems
Measurement problems
Methodological problems
 Impact of culture on IHRM
Recruitment & hiring practices
Building business relationships
Role & use of multiple languages
Perceptions of justice
Decision making
Performance evaluations
Management & Leadership
Development of global mindset
Varying perspectives on careers across cultures
Models of IHRM
American European
Models models
Poole Model
The Brewster-
Matching models
Bournois, Brewster-
Michigan model
Hegewisch, and
New-york model
Brewster Models
Harvard model
Contextual model
5 P Model
Clark & Mallery model
 Models of IHRM
5P Model
Matching model,
Harvard Model,
European Model /Contextual Model
 5 P Model
Dr. Mildred Golden Pryor, J. Chris White, and Dr. Leslie A.
Toombs
Strategic Management Model
Alignment of 5 variables to improve organizations and
their operations: Purpose, Principles, Processes, People,
and Performance.
For an organization to be efficient and effective, socio-
technical organizational theories suggest that all of the 5
variables must be aligned.
They support and reinforce each other.
Incongruence or incompatibility among the variables
expends unnecessary time, energy and money.
Lead to high levels of frustration, feelings of helplessness,
and dissatisfaction for employees.
The 5 variables exist in all organizations.
 Origin of the 5 P's Model.
History
The 5 P's Model was developed by
Pryor, Toombs, and White for their
book, Strategic Quality Management
and for use at their respective places
of employment.
 Purpose involves all the elements that constitute the intention of
the organization. This includes the organization's mission, vision,
goals and objectives, and strategies.
Principles are the guiding philosophies, assumptions, or attitudes
about how the organization should operate and how it should
conduct its business. This variable includes the integrity base,
ethics, and core values to which employees are expected to make a
commitment when they are hired.
Processes are the organizational structures, systems, and
procedures that are used to make the products or perform the
services that the organization provides, as well as the infrastructure
and rules that support these systems and procedures.
People are the individuals (and teams of people) who perform
work that is consistent with the Principles and Processes of an
organization to achieve its Purpose. They are the active
components who accomplish work results.
Performance encompasses all the metrics, measurements, and
expected results that indicate the status of the organization, and
are used as criteria for decision making. Performance results are
fed back into the strategic management process to provide a
means of feedback and control.
 The following steps are a simplified description. See the Strategic
Quality Management book for details.
For PURPOSE:
Identify strengths and weaknesses, threats and opportunities, mission,
vision, goals and objectives, and strategies.
Identify core leadership competencies.
For PRINCIPLES: use a team to develop core values.
For PROCESSES:
List all processes.
Document the processes using flowcharts, process maps and/or checklists.
List process owners. If owners are not identified, designate process owners
who will do the process documentation and improvement.
For PEOPLE:
Determine the extent to which people are empowered, teams are in place.
What is the level of self direction in teams.
What training is needed.
Other things that relate to employees.
For PERFORMANCE:
Identify what measurements are in place/should be in place
Establish key performance indicators (KPI's) and baselines.
Set up a metrics system with targets for improvement.
Track KPI's over time.
 The matching model of HRM
The Michigan and New York models together
are called 'matching Models of HRM'.
Michigan Model This model, as one of the
first in the literature, belongs to Tichy,
Fombrun and Devannas.
In the concept of 'Human Resources
Management', the authors emphasise the
term 'resource'.
Like other resources of the firm, they assert,
people have to be managed in such a way
that they are "obtained cheaply, used
sparingly and developed and exploited as
fully as possible".
 Management of human resources (HR) should be in
accordance with broad organisational requirements like
quality or efficiency.
There has to be a fit between HR and business strategies
(though not manifest in the model).
Fombrun et al (1984) proposed the matching model,
which indicated that HR systems and the organization
structure should be managed in a way that is congruent
with organizational strategy.
This point was made in their classic statement that: The
critical management task is to align the formal structure
and human resource systems so that they drive the
strategic objectives of the organization .
 They define five
areas of HRM
which have to be
both coherent and
consistent among
themselves and
also linked to the
business strategy:
The NewYork Model