UNIT-1

CHANGING ENVIRONMENT HUMAN

RESOURCE MANAGEMENT, CHANGING ROLE
OF HRM, NEW PRACTICE IN INTERNATIONAL
HRM, PERSPECTIVE OF INTERNATIONAL HRM
Changing Environment HRM

Introduction
Changes in the environment of human resource management are
very wide and it plays a crucial role in organizations. These changes
include work force diversity, technological changes, globalization, and
changes in the nature of jobs and work (External Factors). The internal
factors are unions, Organizational culture, conflicts and professional
bodies. An organization seeks to create its own environment out of the
external environment. The environment, which the organization
creates, is called enactment.
CHANGING ROLE OF HRM
Changes are inevitable everywhere i.e. in our personal life, social life,
work life, in nature, in society, in universe etc. We cannot avoid
changes but we can adjust and adapt to such changes for
betterment.
In earlier days, the role of HRM was restricted only to limited activities as
this department used to hire and fire the employees. The role was more
of record keeping type. In fact HR department was called as “Health
and Happiness Department” in earlier days since it used to arrange for
employee picnics and farewell parties after their retirement.
CHANGING ROLE OF HRM
Today’s HR manager is at the centre of the organisation’s web of employees and
departments.
1. Supporting the business : The HR function must adapt to what the modern
business needs - a highly dynamic employee management and planning team
that can react and adapt to the rapidly changing requirements of the
organisation.
2. Employee engagement : HR should no longer be seen as an employees’ last
resort in the case of negative encounters - in fact, modern HR should be
defined by active engagement with employee issues,, listening to concerns,
and building a partnership between HR, employees and managers.
CHANGING ROLE OF HRM

.
3 Change management: It is the process in which HR managers ensure
that employees have the necessary skills and information when an
aspect of their work environment changes
4. Employee Empowerment : As the employees have become
knowledge workers they need to be provided with greater autonomy
and provision of control on the factors that affect the performance.
Granting sanction to the employees to make decision in their work
matters is called employee empowerment.
CHANGING ROLE OF HRM
5.Team Work : The concept of division of labour and specialisation
introduced by Adam Smith which remained for a long time has
changed from single-function to multi-function of workers so that
workers do not remain confined to a single function but can do more
than one function
6.Ethical Management :Ethical issues pose fundamental questions
about fairness, justice, truthfulness, and social responsibility.
IHRM
Types of International Business
International Business usually start with either-
 Exporting
 Licensing or
 Franchising
 FDI
IHRM
1. Exporting: Exporting means selling abroad either directly to target customer or
indirectly through foreign sales agent/ distributor .
2. Licensing : There is an agreement where a firm called licensor grant authority to
a foreign firm the right to use its intangible property.
3. Franchising : It is an option in which a parent company grant the right to do
business to another company in a prescribed manner. It follows more strict
guidelines. Licensing is restricted to manufacturing but franchising is more
popular with service firms like restaurant, hotels, etc.
4. FDI : It refers to operations in one country that are controlled by the
entities in a foreign country.
Objectives of IHRM

 Remaining competitive throughout the world efficient

 Locally Responsive
 Flexible and adaptive
 Capable to transforming learning across their globally dispersed
units
Reasons for growing interest in IHRM

 Globalization of business leading to mobilization of resources.

 Effective management of human resources.
 To minimize the risk of underperformance or failure in overseas assignments.
 Implementation of international strategies by competent managerial personnel
to man overseas assignments.
 Movement from traditional hierarchical organizational structures towards the
network organization.
 Plays significant role in implementing and control of strategies in an international
business.
Cultural Differences in IHRM
 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
 Social organizations e.g. social institutions, authority structures, interest groups,
status systems
Multicultural Management
Multicultural management offers the following benefits:
 Greater creativity and innovation.
 Awareness about the need to maintain sensitivity in dealing with foreign
customers.
 Possibilities of hiring the best talent.
 Creating a „superorganisational culture‟, using the best of all cultures.
 Evolving universally acceptable HR policies and practices.
Companies Adopting IHRM Approaches
 AVON
 General Electrics
 Wipro
 Reebok
 Coco Cola
 Honda
 Toyota
 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
 Address a narrow range of HRM activities
 HR issues relate to employees belonging to single nationality
Domestic HRM
 Limited 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
 Limited risks in domestic assignments
 Limited external factors to deal with.
Perspective OF IHRM
 Cultural Factors
 Uncertainty Avoidance
 Economic Conditions
 Labour Cost Factors
 Labour Relations Factors
Perspective OF IHRM
 Cultural Factors : Culture means shared beliefs, values, norms, and moral
by the people. Organisational culture means a pervasive underlying set
of beliefs, assumptions, values, shared feelings and perceptions, which
influence the behaviour of people in the organisation.
 Uncertainty Avoidance: In simple terms, uncertainty avoidance means
the creation of set of rules and structures to eliminate ambiguity in
organisations and support those beliefs that are promising for certainty
and conformity.
 Economic Conditions: Like cultural differences, there abound economic
differences among nations/countries. Differences in economic conditions
or systems cause inter-country differences in HR practices. For example, in
case of a country with free enterprise systems, the need for efficiency
tends to favour HR practices and policies that encourage productivity,
efficient workers, etc.
Perspective OF IHRM
 Labour Cost Factors :HR practices are also influenced by
differences in labour costs existed in different countries. If the labour
cost is high, it can require more focus on labour efficiency which, in
turn, can influence HR practice to shift toward improving labour
performance. Labour may get remuneration as per performance
i.e., pay-for-performance.
 Labour Relations Factors : Labour relations or industrial relations i.e.,
relationship between employees, employers and the government
that vary from country to country and have an enormous bearing
on affecting HR practices. For instance, in Germany,
codetermination is the rule. Here, the employees enjoy legal right
to have their voice in the matters of their company.
NEW PRACTICES IN IHRM
1. Planning
2. Recruitment and Selection
3. Training
4. Compensation
5. Performance Appraisal
1.Planning
There are usually three approaches to HR Planning in multinationals.
1. Ethnocentric
2. Polycentric
3. Geocentric
Ethnocentric

 All key management positions are filled by parent company nations and foreign
subsidiaries are being locally staffed or what is termed as HCN‟s
 Reasons-
 Lack of managerial talent in the host country
 Desire to maintain a unified corporate culture and tighter control
 Desire to disseminate the core competencies of parent company across foreign
subsidiaries.
Polycentric

 The foreign subsidiaries are managed by host country nations and

home office head quarters by parent country nations
 This approach may reduce the local cultural misunderstanding that
expatriate managers may exhibit
Reasons-
 Adjustment and Language learning problems are eliminated
 American Express and Nestle follow this approach for staffing their
subsidiary
Geocentric
 This approach best seeks the best people for key jobs throughout the
organisation, regardless of nationality.
 Reasons-
 Enable the firm to develop an international executive cadre and reduce the
tendency of national identification of managers with the units.
2.Recruitment and Selection

 Ensures right man on the right job at the right time and right place.
 Selecting employee for foreign assignments means screening them
for those traits that predict success in adapting to what may be
dramatically new environment
 A recent research study has identified five factors perceived by
international employees to contribute to success in a foreign
assignment.
 There were: job knowledge and motivation, relational skills, flexibility/
adaptability, extra cultural openness and family situation.
3.Training

 Employees in an MNC‟s need induction, orientation and

training to be imparted in the social, cultural and
technical aspects to make them fit for business
requirement of today and tomorrow.
An oversee employees need four-level training to be
imparted
 Level1: training focuses on the impact of cultural
differences and their impact on business outcomes.
 Level2: focuses on attitude and train the participants on
how attitudes (both negative and positive) are formed
and how they influence behaviour.
 Level3: Factual knowledge about the target country
4.Compensation
 Paying compensation that satisfies employee but also maintain fairness
and compensation.
5. Performance Appraisal
 Two most crucial issue which make performance appraisal complicated
are-
 Who will appraise the performance?
 What will be the criterion of appraising ?
 Local managers having some inputs can appraise the expatriate
employees. But such appraisal is likely to be distorted by cultural
differences.
 In order to resolve the appraisal issues, experts have suggested a five
point procedure for improving the expatriate employee‟s appraisal .