INTRODUCTION

TO
IHRM
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Outline
A model of International Human Resource
Management
The Differences between Domestic and
International Human Resource
Management
Models of Strategic HRM in Multinational
Companies
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What is Human Resource
Management?
Human resource management is an
integrated set of personnel activities, linked
strategically with organizational objectives

These activities include:
human resource planning
staffing (recruitment, selection, placement)
performance management
training and development
compensation (remuneration) and benefits
industrial relations
What is HRM? contd....
There is no universally accepted definition
of HRM
It is to do with the management of people
It is focused on achieving increased
organizational performance through:
(i) productivity, (ii) commitment, (iii) flexibility
and (iv) quality of a product or service
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Various definitions of HRM

HRM is a distinctive approach to employment management which
seeks to achieve competitive advantage through the strategic
deployment of a highly committed and capable workforce, using an
integrated array of cultural, structural and personnel techniques
(Storey 2001)

HRM includes anything and everything associated with the
management of employment relationships in the firm. We do not
associate HRM solely with a high-commitment model of labour
management or with any particular ideology or style of
management (Boxall and Purcell 2000)

HRM refers to the practices and policies you need to carry out the
personnel aspects of your management job, specifically, selecting,
training, appraising, rewarding, and providing a safe, ethical and fair
environment for your companys employees

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What is International HRM?
The field of IHRM is about understanding,
researching, applying and revising all human
resource activities in their internal and
external contexts as they impact the process
of managing human resources in enterprises
throughout the global environment to
enhance the experience of multiple
stakeholders, including investors, customers,
employees, partners, suppliers, environment
and society.
(Briscoe & Schuler, 2004, p. 20)
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The interplay among three HRM dimensions (HR
activities, types of employees, and countries of
operation) in an international environment.
the broad HR activities (acquiring, motivating
and retaining)
the national or country categories involved in
international HRM activities (Parent country,
host country and third country)
the three categories of employees of an
international firm the PCNS, TCNs and
HCNs
Why study IHRM?
HR managers in MNCs with a narrow
understanding of just the local business
environment are most likely to fail
The increasing interconnectedness of
individuals, firms and nations requires that
HR managers possess global business
knowledge
The important reason?
.Performance and Profits
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HRM and the Employment Context
The world of work has changed
dramatically over the last thirty years
Increased interest in IHRM based on a
number of key changes, including:
Changes to the political context
Changes to the economic context
Changes to industrial structure and
employment

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Changes to the Political Context
Organisations, and their workers, are
embedded within three distinct political
contexts, all of which are evolving:
1. The international political environment
Extension of trade liberalisation and deregulation
Growth of super-national alliances
2. The national political environment
Eroding state control, replaced by privatisation
Labour market deregulation
3. Regional/local political environment
Largely concerned with encouraging investment
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Changes to the Economic Context:
Globalisation
Perhaps the key economic change of the past
thirty years has been the intense globalisation of
economic activity
A decent definition (Blyton): the integration of spatially
separate locations into a single international market
Globalisation is heavily tied to the political landscape
Companies operate at the global level often in order to
decrease production costs
Welch: Ideally you'd have every plant you own on a barge
This begs the question: what role do national
institutions play in shaping the global economy?

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Changes to the Economic Context:
Competitive Pressures
Competitive pressures have increased in the past thirty
years for a number of reasons:
Globalisation and decreased barriers to market entry
Continued search for more efficient business operations
Relentless technological change/advances
Political activities that espouse benefits of laissez-faire approach
The key goal of a firm is to gain competitive advantage
over its rival companies
Firms generally have two contrasting strategies towards
labour in searching for competitive advantage:
Attempts to increase labour output
Attempts to reduce labour costs

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Changes to Industrial Structure
and Employment
A key change in developed economies has
been the shift from manufacturing to service
industry predominance
Other changes include the proportion of
male/female workers, the rise of part-time and
self employment, and the location of
employment
An increasingly female members participation in
employment
Links between increased female and part-time work
Work from home; expansion of rural greenfield sites
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Changes to Job Security
Increase in unemployment rates worldwide
Increase in redundancies
Use of temporary/contingent workers
Temporary work associated with low costs, little if any
investment, increased employer flexibility, etc.
In all far less job security worldwide than before
Having a job for life is often considered a thing of the past
Growth of fixed-term and precarious employment
Pervasive sense of insecurity for many workers
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Fundamental Debate
Universalist vs Contingency-based HRM
Are there a set of HR practices that will be
universally successful in any national
business context?
Or do different national business systems
call for particularistic forms and
adaptations of HR practices?
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Development of the concept of HRM
The roots of HRM can be traced back to the 1890s
and the rise of industrial welfare work
Mixture of humanitarian, religious and business motives
Goal was to provide workplace amenities (i.e., medical care,
housing, libraries)
The emergence of scientific management led to
more technical/bureaucratic management systems
Fordist mass production, deskilling (see Braverman),
Taylorist control over work all these led to a growing
professionalization of the role
These historical circumstances gave rise to the more
formalized and embedded concept of personnel
management

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Is HRM the same as personnel
management?
HRM concept originated during the period of Ronald
Regan in USA and Mrs. Margaret Thatcher in UK
It emerged in both theory and practice in the late
1970s, early 1980s
It has now almost universally replaced traditional
personnel management
HRM is more individualistic, flexible and strategic vis-
-vis personnel management
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HRM in Management Context
What is the relationship between HRM in a
broader management context?
HRM is strategic, like all other managerial
functions (operations management, supply
chain management, accounting, finance)
But it is about more than financial returns

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Structural influences on HRM
Trade unions (where they have the power)
shape HRM policy and practice
Employers associations (where they exist)
shape HRM policy and practice
Independent arbitrators (where they exist)
shape HRM policy and practice
Of course, state regulation (labour law)
has a profound influence on HRM
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The Activities of HRM
First, staffing, which consists of: planning,
recruitment and selection
Second, training and development
Third, performance management
Fourth, compensation management
Fifth, employee relations, consisting of:
voice and participation, procedures and
grievances, fairness, health and safety
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HR Planning
The forecasting of demand in future for
products/services
On the basis of that demand, determining
how many workers are needed
Integrates finance, marketing and HR
Takes account of labour turnover (number
of staff leaving the organisation)
Helps managers to formulate recruitment
and retention policies
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Recruitment
First step in recruitment is to conduct job
and role analyses
Second step is to write a job description
(title, location, purpose, responsibilities)
and person specification
Last, recruitment should target potential
candidates in order to create a pool from
which to select
Can be internal, closed or open
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Selection
Interviewing is the conventional method
(one-on-one, panel, telephone)
Skills tests (general ability, literacy and
numeracy, specific skills, work sample)
Personality tests
References, education, years of work
experience, ect.
A combination of methods is best
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Training and Development
HR is charged with co-ordinating worker
training and development
Development is essential in the knowledge
economy; can be positive sum in that the
workers will feel invested in
Identify learning needs, devise a plan,
deliver the training, evaluate outcomes
Make sure the training is strategic
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Performance Management
Involves induction and socialisation
Performance appraisal can be conducted
by supervisors, peers, customers; workers
can also assess themselves
Purpose is to identify and remedy causes
of poor performance (and, lest we forget,
to reward outstanding performance)
Can be viewed by workers as surveillance
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Compensation Management
Is not simply about administering payroll
Has two objectives: (i) to keep down the
cost of labour and (ii) to motivate and to
retain workers
Entails both financial rewards and non-
financial benefits
Is increasingly based on the concept of
performance-related pay
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Employee Relations
Is ultimately about fostering a sense of
partnership and the will to co-operate
Is realised by ensuring (i) employee voice,
(ii) transparent procedures, (iii) a means
by which workers can file grievances, (iv)
a safe workplace and (v) perceived
fairness in decision-making
The logic is that positive interpersonal
relations will translate into productivity
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Whats the Common Thread?
HR managers ensure that workers within
the organisation are: committed, capable,
motivated and aligned to organisational
objectives
They strive to reduce organisational
friction and promote co-operation within
and between workers and managers
Their role is strategic in that HRM aims to
enhance performance and efficiency
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Embeddedness
HRM policy and practice, however, are
embedded within, and must respond to, an
organisations culture
Organisations, in turn, are embedded in
both sectoral and national cultures
Therefore, any analysis of HRM generally,
and IHRM in particular, must take account
of exogenous influences
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Definition of 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
The 3 Categories of
Employees
Host-country nationals (HCNs)
Parent-country nationals (PCNs)
Third-country nationals (TCNs)
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Differences between domestic HRM and IHRM
IHRM complexity can be attributed to six factors:
1. Human resource planning
2. Staffing (recruitment, selection, placement)
3. Performance management
4. Training and development
5. Compensation (remuneration) and benefits
6. Industrial relations
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Additional factors that impact on the
differences between Domestic and
international IHRM
The cultural environment
The industry(or industries) with which the
multinational is primarily involved
The extent of reliance of the multinational
on its home-country domestic market
The attitudes of senior management
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Laurents steps to truly international HRM
1. Recognize that ones own HRM reflects home culture
assumptions and values.
2. Recognize that ones own peculiar ways are neither universally
better nor worse than others - just different and likely to exhibit
strengths and weaknesses, particularly abroad.
3. Recognize that organizations foreign subsidiaries may prefer other
ways to manage people ways that are neither intrinsically better
nor worse, but possibly more effective locally.
4. Headquarters willingness to acknowledge cultural differences and
steps to make them discussable and therefore usable.
5. Build shared genuine belief that cross-cultural learning will result in
more creative and effective ways of managing people.
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External Factors

Culture environment
Culture is members of a group or society
share a distinct way of life with common
values, attitudes, & behaviours that are
transmitted over time in a gradual, yet
dynamic, process (Phatak, 1995)
The cultural differences influence people in
a work environment (Harzing &
Ruysseveldt, 2006)
Culture vs nation,
Emic - etic distinction, and
divergence/convergence theories
Culture awareness in work place

Hofstede s Framework of
National Culture
Culture's Consequences: International Differences;
Hofsteade proposed that national culture can be
set out as a measurable set of constructs.
Five Cultural Dimensions:
1. Power Distance Index (PDI)
2. Individualism (IDV)
3. Masculinity (MAS)
4. Uncertainty Avoidance Index (UAI)
5. Long-Term Orientation (LTD)
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Internal Factors
Industry type
global - a series of linked domestic
industries, rivals compete on a worldwide
basis
multi-domestic- a collection of domestic
industries where domestic strategies are
importance.
Internal attitudes
international orientation of senior managers
DEFINITION OF
STRATEGIC HR
..... means future-focused HR initiatives
and programs that affect the entire
organization. They impact the
corporation s stated goals and
objectives and also provide the firm with a
competitive advantage in the area of people
management or workforce productivity.
John Sullivan - Rethinking Strategic HR
Ronnie Tan
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Strategy and IHRM
Different stages of business strategies:
Domestic stage;
International stage;
Multinational stage or global integration
stage.
Different patterns of cross-cultural
interaction.