HRM 303

(International)

Seminar 1: Introduction to IHRM

What is IHRM?

Includes 3 major areas:

 Management of human resources in global

corporations
 Management of expatriate employees

 Comparison of HRM practices in a variety of

different countries.
Defining IHRM

Definition
 (IHRM) comprises the development of human resource
capacities to meet the diverse needs of various subsidiaries of
multinational and global corporations (Phatack, Bhagat &
Kashlak, 2005: 472)

 Includes the 6 general fields of HRM

 HR Planning
 Staffing (Recruitment, Selection, Placement)
 Performance Management
 Training & Development
 Compensation (Remuneration) and Benefits
 Industrial Relations
Reasons for Growth of Interest in
IRHM (1)
 Rapid growth of internationalisation & global
competition
 HRM increasingly recognised as major determinant
of success or failure in international business
 Underperformance & failure in international
assignments continues to be costly, both in human
and financial terms
 Implementation of global strategy is frequently
constrained by shortages of international
management talent
Reasons for Growth of Interest in
IRHM (2)
 Intl HRM issues are becoming important in a
wide range of organisations (not just large
MNCs)
 Realisation that HR plays an important role in
new organisational structures (eg networked
organisations) as orgs move away from
traditional hierarchical structures
 Evidence that HR strategy plays a significant
role in implementation and control in the
international firm
International Corporate Strategy
and IHRM (we examine this in more detail
nextApproaches
 week). to IHRM reflect an org’s international corporate
strategy.
 4 main approaches to managing & subsidiaries:

1. Ethnocentric (home country approach)

2. Polycentric (manage on a local basis)

3. Regiocentric (similar to polycentric, but have regional groups with

common HRM practices

4. Geocentric (Global) Integrated strategy. Manage staff on global

basis. HRM practices developed with input from HQ and
subsidiaries
Classifying Employees in
International Firms
 HCN (Host-Country National) eg An Algerian citizen
working for a French company in Algeria

 PCN (Parent-County National) eg a French citizen

working for a French company in Algeria

 TCN (Third-Country National) eg An Singaporean

citizen working for an Indian company in China

 Note: These do not cover all workers.

What is an expatriate?

 An employee who is working and temporarily

residing in a foreign country (i.e working outside
their home countries)
 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
Differences between domestic
and international HRM (1)
• More functions & activities (taxation, relocation, orientation, language)
• Broader perspectives (PCN, HCN & TCN)

• More involvement in employees’ personal lives

• Changes in emphasis as workforce mix varies (training, staffing,
planning etc)
• Risk exposure (high cost of failure, expatriate remuneration x 3 domestic;
terrorism and ‘international events’)
• More external influences (government, economy and business practices
of host country) see next slide
Choosing an approach to
IHRM
Along with the previous 4 approaches, the
following factors also influence the approach
to IHRM
 Political and legal concerns

 Level of development in foreign locations

 Technology & nature of the product

 Organisational life cycle

 Age & history of the subsidiary

 Organisational & national cultural differences

 Factors that moderate differences between
domestic & IHRM
s
The industry (or industries) within
The Cultural which the multinational is primarily
Environment involved

Domestic &
International
activities of the
HRM Function

Complexity involved in operating in

Extent of reliance of the
different countries & employing
multinational on its home country
different national categories of
or domestic market
employees

Attitudes of Senior Management

IHRM and Expatriate
Management Research
• Focused on Western managers overseas (not
Asian/African/South American managers in western countries, TCNs)

• Emphasis on remuneration packages to

“compensate” for the “hardship” of overseas
postings (not cultural factors, integration & assimilation strategies or
global perspectives) eg. Membership of expatriate clubs

• Concentration on managers rather than diplomats,

teachers, nurses, aid workers, etc.
Some Assumptions of IHRM
Theory (1)
• IHRM is mainly concerned with parent company
mangers on long-term foreign assignments

• International assignments usually involve

working in “foreign” locations

• Almost by definition, international assignments involve

significant levels of “hardship”, for both the expatriate
manager and their family; and THEREFORE…
Some Assumptions of IHRM
Theory (2)
• Expatriates are highly likely to “fail” ie. return
home early, and therefore…

• Expatriates require generous “compensation”

systems

• Despite the costs, expatriation is a necessary

evil which will not only continue but grow!