288 33 Powerpoint Slides Chapter 17 International Human Resource Management

1
International Business
Rakesh Mohan Joshi Professor & Chairperson, IIFT New Delhi
Copyright @ Oxford University Press International Business R. M. Joshi
Chapter 17: International Human Resource Management
Chapter 17
INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Copyright @ Oxford University Press International Business R. M. Joshi Chapter 17: International Human Resource Management
Learning Objectives
To explain the concept of international human
resource management
To elucidate various types of international organizational structures
To discuss strategic orientations and practices

for international human resource management To elaborate upon the management of various human resource activities
Globalization and HRM

The rapid globalization of business has resulted in new challenges for cross-country management of human resources which include
HRM has become a crucial determinant to a firms success Growing significance of trans-national experience for top Off-shoring of business operations to low-cost locations
or failure in international business.
management jobs in global corporations.
has augmented the complexity of staffing, performance monitoring, and differential compensations.
Human resource practices followed in the West may not be
very relevant in other countries due to differences in sociocultural and regulatory environments.
Human Resource Management (HRM)

All those activities undertaken by an organization to
utilize its human resources effectively. It includes

activities, such as staffing, training and development, expatriate management, performance management, compensation, fulfillment of regulatory obligations, such as labour relations, human welfare and safety
etc., and industrial relations.
International HRM
Comprising diverse requirements of
various subsidiaries and developing and sustaining human resource capabilities to
achieve organizational goals.

A Model of International HRM

Its an interplay among three dimensions,
i.e., human resource activities, types of

employees, and countries of operations. Take Fig. 17.1 from page no. 728
Domestic vs. International HRM

Increased functional activities
Functional heterogeneity Increased involvement in employees personal lives
Enhanced risks
Increased influence of external

environment
International Organizational Structures

Export Department International Division Structure Global Organizational Structure Global Functional Division Structures

Global Product Structure Global Geographic Structure
Global Matrix Structure

Trans-national Network Structure
Strategic IHRM Orientations and Practices
Ethnocentric IHRM Orientation

The company tends to follow the parent
companys home country HRM practices for its employees across the world. Key managerial Locals are and technical personnel are recruited from the parent country nationals (PCNs). with limited opportunities to grow.
employed only for supporting or lower level jobs
Polycentric IHRM Orientation

Different HR strategies are adopted for different
countries depending upon the need.
Host
country nationals (HCNs) are often employed in foreign subsidiaries whereas the headquarters
are generally managed by the PCNs. Host

country nationals have higher opportunities for career advancement. Besides, performance
evaluation measures and compensation also

vary considerably from subsidiary to subsidiary.
Regiocentric IHRM Orientation

Most HR strategies are adopted
regionally. Depending upon the nature of business and marketing strategy,
employees are transferred within a region rather than across the region.
Geocentric IHRM Orientation

The HR policies and practices of the firm are globally integrated leading to
development of a real global corporation. The best talented personnel are posted throughout the MNE irrespective of their nationalities.
Managing International Human Resource Activities
Staffing
The process of determining the organizations
current and future human resource requirements

to meet the organizational goals and taking appropriate steps so as to fulfill those
requirements. The process involves identifying the human resource requirement of an
organization, and recruitment, selection, and

placement of human resources
Manpower Availability
Availability of desired manpower affects a firms decision to hire locals or expatriates. MNEs often hire locals for lower level jobs except for some Middle East countries which import people even for labour and other low-paid jobs. However, for most
skilled and professional assignments, quality of

educational system, availability of scientists and engineers, and quality of management schools plays an important role in a firms decisions to hire locals or expatriates
Forms of International Assignments

Filling up job positions Management development Organizational development
Types of International Assignments
Short-term (upto three months): Assignments related to small project work, machinery
or plant repairing, or an interim arrangement till a

suitable permanent arrangement is made
Extended (Upto one year): Involving similar activities as for short-term assignments for a relatively longer duration
Long-term (one to five years): Also referred to as traditional expatriate assignment, involve a well-defined role in foreign operations. Assignments, such as production or marketing manager or a managing director of a subsidiary
Non-standard Assignments
Commuter assignments
Rotational assignments Contractual assignments
Virtual assignments
Sources of Human Resources for International Staffing
Local citizens or HCNs
Local employees hired by an MNE of the

host country are known as Host Country Nationals (HCNs). A large number of
MNEs engage host country citizens for middle and lower level jobs.
Expatriates Employees who temporarily reside and work outside their home country are commonly known as expatriates or
expats. Expatriates are often used as agents of direct control, socialization, network trade, and gathering market
business intelligence.
Parent country nationals (PCNs) Employees country who where are citizens the of the is
MNE
headquartered. Historically MNEs filled up key positions in their foreign affiliates
with PCNs.
Third country nationals (TCNs)
Employees, who are citizens of countries

other than the country in which they are assigned to work or the country where the MNE is headquartered.
Off-shoring
Transferring jobs to foreign countries which were previously carried out domestically.
The breakthroughs in ICT have made it

possible to off-shore various service
activities too.
Recruitment and Selection

Recruitment: The process by which an
organization attracts the most competent

people to apply for its job openings.
Selection:
The
process
by
which
organizations fill their vacant positions. The process of recruitment and selection varies widely among countries
Characteristics of Global Managers
Global mindset
Strategic
perspective
vision
and
long-term
Ability to work in diverse culture

Willingness to relocate for international assignments Ability to manage change and transition
Selection Criteria for International Assignments

Technical and managerial competence environments
Ability to perform under cross-cultural
Family
attitude
towards
international
assignments

Regulatory framework in host countries

Language
Managing Expatriates
People working out of their home countries, also known as expatriates, form an integral part of a firms international staffing strategy, especially for higher management positions. Beside identifying and recruiting the right personnel with desired skills for international assignments, it is also extremely important to provide them with a conducive environment to get their optimum output
Reasons for Expatriate Failure

Inability to adjust in alien cultures Career apprehensions on repatriation Relocation anxieties High costs of living and income gaps Problems related to lifestyle adjustments, such as uncomfortable living conditions Family problems, such as spouse dissatisfaction, childrens education, and safety concerns Health and medical concerns Adaptation problems to different management styles
Expatriate Adjustment Process

The series of phases expatriates undergo while
adjusting to a foreign culture that include:

Initial euphoria Cultural shock Adjustment Re-entry
Repatriation
The process of returning home by an expatriate after completion of foreign assignment that include:
Preparation
Physical relocation
Transition
Re-adjustment
Training
Training: The process by which employees acquire skills, knowledge, and abilities to perform both their current and future assignments in the organization. Training so as to aims at altering the behaviour, of
attitude, knowledge, and skills of personnel increase performance employees.
Pre-departure Training for Overseas Assignments
Cultural sensitization programmes Preliminary visit
Language training
Practical training
Performance Management
The process that enables a firm to evaluate the performance of its personnel against pre-defined parameters for their consistent improvements so as to achieve organizational goals. The system used to formally assess and measure employees
work performance is termed as performance

appraisal.
Compensation
The financial remuneration that employees receive in exchange of their services rendered to the organization. It includes wages, salaries, pay rise, and other monetary issues.
A good compensation system should be designed within the regulatory framework of the country of operation of an MNE and should be able to attract and retain the best available talent
Key Components of International Compensation Systems
Base salary: Foreign service premium: Allowances:
Hardship allowance Cost of living allowance (COLA) Housing allowance Home leave allowances Education allowances Relocation allowances Assistance for tax equalization
Strategic Approaches to International Compensation
Home-country-based
Host-country-based Hybrid of the above two
Regulatory Framework and Industrial Relations

International firms are required to adhere to various legislative provisions under the labour laws; compensation and benefit laws; and individual rights laws related to civil rights, immigration, discrimination, and sexual harassment at workplace in countries
of
their
operations
which
often
have
considerable differences.

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Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

To explain the concept of international human

To elucidate various types of international organizational structures

To discuss strategic orientations and practices

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Globalization and HRM

or failure in international business.

management jobs in global corporations.

Human resource practices followed in the West may not be

Human Resource Management (HRM)

utilize its human resources effectively. It includes

etc., and industrial relations.

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

various subsidiaries and developing and sustaining human resource capabilities to

achieve organizational goals.

A Model of International HRM

i.e., human resource activities, types of

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Domestic vs. International HRM

Increased influence of external

Copyright @ Oxford University Press International Business R. M. Joshi

International Organizational Structures

Global Product Structure Global Geographic Structure

Global Matrix Structure

Copyright @ Oxford University Press International Business R. M. Joshi

Strategic IHRM Orientations and Practices

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Ethnocentric IHRM Orientation

employed only for supporting or lower level jobs

Polycentric IHRM Orientation

countries depending upon the need.

are generally managed by the PCNs. Host

evaluation measures and compensation also

Regiocentric IHRM Orientation

regionally. Depending upon the nature of business and marketing strategy,

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Geocentric IHRM Orientation

Managing International Human Resource Activities

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

current and future human resource requirements

requirements. The process involves identifying the human resource requirement of an

organization, and recruitment, selection, and

skilled and professional assignments, quality of

Forms of International Assignments

Filling up job positions Management development Organizational development

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Types of International Assignments

or plant repairing, or an interim arrangement till a

Copyright @ Oxford University Press International Business R. M. Joshi

Chapter 17: International Human Resource Management

Copyright @ Oxford University Press International Business R. M. Joshi

Sources of Human Resources for International Staffing

Local citizens or HCNs