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DEFINITION OF IHRM
Employers rely on International Human Resource Management (IHRM) to deal with global HR challenges. Thus IHRM can be defined as:
Model of IHRM
HR Planning
Difficulty in implementing HR procedure in host countries. Providing developmental opportunities for international managers.
Employee Hiring
Ethnocentric, polycentric or geocentric approach to staffing. Selection of expatriates. Managing repatriation process.
Performance Management
Constraints while operating in host countries need to be considered. Identification of raters to evaluate subsidiary performance.
Industrial Relations
Handling of industrial relations problem in a subsidiary. Union tactics in subsidiaries. Attitude of parent company towards unions in a subsidiary.
Korea, Singapore, Japan & Indonesia believes that a family man should be paid more for the same job than a single woman.
Nepotism
Earlier hiring relatives was an accepted practice especially in small businesses. However, this is changing as can be seen in Hong Kong & Singapore.
Overtime
Australian & Singaporean firms add staff when workload increases. Korean & Japanese firms insists on existing staff working long hours.
Promotions
Countries also differ on basis of promotion, i.e., length of service, merit or other factors.
For effective management of both parent country & third-country nationals. Housing arrangements, health care, and all aspects of remuneration packages for foreign assignments.
Changes in Emphasis
Need for parent country and third-country nationals declines, more trained locals become available. Resources reallocated to staff selection, training and management development.
Risk Exposure
Employees physical safety. Kidnapping & Terrorism. Poor performance represents huge financial losses for firms. Seizure of MNCs assets if HR policies antagonize with host country.
External Influence
The Subsidiary HR managers have to deal with ministers, political figures, and a greater variety of economic and social interest groups.
Repatriation
Remuneration
Performance Management
Employee Relations
Multicultural Management
Dealing with multiple business units while attempting to achieve globally & regionally focused strategies
All key management positions are held by parent country nationals. This may be apt for the early stages of international business. E.g., Philips, Procter & Gamble.
Parent country nationals occupy key positions at corporate headquarters. Host country nationals hired to manage subsidiaries. E.g., HUL
This approach seeks the best people for key jobs throughout the organization, regardless of nationality. E.g., ColgatePalmolive
Classifying Employees
Parent country nationals (PCNs) Are employees from the country in which the organization is based (Headquarters) Host country nationals (HCNs) Are employees from the country in which the subsidiary is based i.e. A French person working in an organization based in France Third country nationals (TCNs) Are employees who are working in a different country (i.e. Not a PCN or TCN)
Communication difficulties in dealing with the parent company Lack of opportunities for the home countrys internationals to gain international and cross cultural experiences
TCNs are usually career international business managers with a wealth of experience
Local nationals are impeded in their efforts to upgrade their own ranks and assume responsible positions
Expatriates
Expatriates are employees who go to work in another country. They can either work for the organization already in their home country or can be recruited externally. Their assignments can vary in length and purpose. From short visits of days/weeks to longer terms of months/years. The cost of using expatriates is high so it is essential that they are carefully selected and developed. Effective pre-departure training is essential to support the employee to adapt to a new culture and country as well as a new job.
Departure
Selection Process
Pre-assignment training
Culture shock
Culture shock is a sense of discomfort brought about by the inability to interpret the world around you, to predict what will happen next, and to know how to appropriately respond.
Low
Language Training
Practical Training
It seeks to help the expatriate manager and family feel AT HOME in the host country.
HCN Training
Focuses on:
Gaining knowledge about the parent organization and its global presence and objectives. Acquisition of technical know- how specific to organization. Role of subsidiary in the MNCs road map both from technological as well as corporate culture perspective. General awareness of the parent country cultural norms.
Paying Expatriates
Salary
Taxes: -Equalisation
-Protection
Expat Compensation
Benefits
Incentives
Allowances
Going-rate approach
Cafeteria approach
Regional approach
Repatriation
Benefits
Imbibed global culture and also have understood local culture Understanding how the company is perceived in other countries Understand both the operations of home as well as host countries
Reasons
Period of positioning got over
Childrens education
Repatriation Process
Preparation
Physical Relocation
Transition
ReAdjustment
Employee Relations
Handling Labour Issues Delegated to foreign subsidiaries Labour relations centralised when inter-subsidiary production integration is present Depends on nationality of ownership of subsidiary More intervention when subsidiary is of strategic importance Union Tactics Strike most common tactic International Trade Secretariats (ITS) Lobbying for restrictive national legislations Intervention of ILO, UNCTAD, EU & OECD Principles of ILO Freedom of associations Right to organise & collectively bargain Abolition of forced labour Non-discrimination in employment
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Multiculturalism
Culture customs, beliefs, norms & values that guide behaviour of people in a society or passed on from one generation to the next Multiculturalism people from many cultures (countries) interact regularly Benefits Greater creativity & innovation Sensitivity in dealing with foreign customers Possibilities of hiring best talent Super organisational culture Universally acceptable HR policies & practices
Power Distance
Individualism
Uncertainty avoidance
Masculinity
Assessing Culture
Functions 1. R&D; 2. Manufacturing, Marketing, Distribution, Sales of the products to each particular base country; 3. Manufacturing, Marketing, Distribution to the countries in its allocated geographic region.
Responsible Regions: USA--America, Australia, India and UK JAPAN--Europe & Pacific Rim (except Australia) FRANCE--France, Africa and Middle East CHINA--Far east(except Japan) Sales Branches: The MNC (Multinational Corporation) also has branches in the majority of the countries where it sells its products, however they are only responsible for the sales and minor servicing of the products.
4 Training Based on the human resource structure, a normal inprocess employee training and expatriates awareness of culture differences training are required. Although the expatriates are chosen by their personalities and individual culture, training on the host country culture would help them align into the culture more rapidly and smoothly. The normal in-process employee training should include organizational culture, philosophy training and skill & technology training required for the different jobs, such as total quality management, ISO14000 etc. Honda Indias experience proved the company culture training could reduce the culture conflicts. (Saini, 2005, pp.71-81)
Website link for case study: http://judyzprouse.blogspot.com/2010/07/cas e-study-of-ihrm-of-mnc.html Date of case study: july 2010