Chapter One

Introduction

Chapter Learning Objectives

After reading this chapter, you should be able to: define key terms in international human resource management (IHRM) and consider several definitions of IHRM discuss the historically significant issue of expatriate assignment management and review the evolution of these assignments to reflect the increasing diversity with regard to what constitutes international work and the type and length of international assignments
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Chapter Learning Objectives

outline the differences between domestic and international human resource management, and detail a model which summarizes the variables that moderate these differences

Chapter Learning Objectives

discuss the complexity of IHRM, the increasing potential for challenges to existing IHRM practices and current models, and an increasing awareness of the wide number of choices within IHRM practices due to increased transparency and faster and more detailed diffusion of these practices across organizational units and firms

(c) 2009 by Nelson Education Limited.

Opening Vignette

Expansion Plans: Kraft and Ivanhoe Mines Ltd. (Canada) changing characteristics of HR in an international context planning, recruiting and selecting developing and rewarding evaluating performance and dismissing
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Terms
HRM IHRM NAFTA UNCTAD

HCN PCN TCN

MNE culture shock emi-etic distinction

expatriate inpatriate
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Interrelationships between Approaches to the Field

(Figure 1.1)

Multinational Enterprise (MNE)

a firm which owns or controls business activities in more than one foreign country

Defining HRM
An organizations HRM activities include
human resource planning staffing (recruitment, selections, placement) performance management training and development compensation (remuneration) and benefits industrial relations
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A Model of HRM (Figure 1.2)

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Defining IHRM

The interplay among these three dimensions in Figure 1.2

human resource activities type of employees countries of operation

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Defining Expatriate

an employee who is working and temporarily resigning in a foreign country

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International Assignments Create Expatriates (Figure 1.3)

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Defining Inpatriate

transfer of subsidiary staff into the parent country (headquarters) operations

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Differences Between Domestic HRM and IHRM

IHRM complexity can be attributed to six factors more HR activities the need for a broader perspective more involvement in employees personal lives changes in emphasis as the workforce mix of expatriates and locals varies risk exposure broader external influences
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More HR Activities

International
taxation relocation and orientation expatriate administrative services host government relations language translation services
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The Need for a Broader Perspective

administering programs that are equitable for more than one group.

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More Involvement in Employees Personal Lives

Ensure expatriates understand housing arrangements healthcare compensation (cost-of-living allowances, premiums, taxes) visa requirements schooling
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Risk Exposure

expatriate failure direct costs indirect costs militant activities emergency evacuation

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Broader External Influences

government economy labour standards and costs taxation health and safety laws, compliance regulations, codes of conduct

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Variables that Moderate Differences Between Domestic and IHRM (Figure 1.4 )

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The Cultural Environment

Defining culture
a shaping process overtime that generates relative stability, reflecting a shared knowledge structure that accentuates variability in values, behavioural norms, and patterns of behaviour.

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The Cultural Environment

Defining culture shock

many adjustments to new cultural environments in short periods of time, challenging peoples frames of reference in that their sense of self (nationality) comes into question.

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The Cultural Environment

Prior rather than posthoc Do national differences represent cultural differences?

Answer no Page 1-31 24

The Cultural Environment

Emic etic aspects of concepts or behaviour

Emic culture specific (specificity/divergence) Etic culture common (universality/convergence)

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The Cultural Environment

cultural awareness cultural differences differences in work-related values

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Industry Type

multi domestic industry global industry

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Industry Type

Laurents Steps to Truly International HRM

(IHRM Notebook 1.2)

recognize that ones own HRM reflects home culture assumptions and values 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
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Industry Type

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
headquarters willingness to acknowledge cultural differences and steps to make them discussable and therefore usable
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Industry Type

build shared genuine belief that cross-cultural learning will result in more creative and effective ways of managing people

(c) 2009 by Nelson Education Limited.

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Reliance of the Multinational on its Home Country Domestic Market

NAFTA
UNCTAD

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World Top 10 Nonfinancial Transnational Corps., Ranked By Transnational Index (Table 1.1)

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World Top Ten Non-Financial Transnational Corps., Ranked Only By Foreign Assets (Table 1.2)

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Attitudes of Senior Management to International Operations

Fostering a global mindset

think globally globally oriented staff

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Strategic HRM in Multinational Enterprises (Figure 1.5 )

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Discussion Questions

1. What are the main similarities and differences between domestic and international HRM? 2. Define these terms: IHRM, PCN, HCN, and TCN.
3. Discuss at least two of the variables that moderate differences between domestic and international HR practices.
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Case: Two Sides to Every Story

1. What are the key HR related problems in this case?
2. What could Pressmans International HR function at headquarters have done differently to avoid some of the current HR related problems and conflicts?

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Case: Two Sides to Every Story

3. How could headquarters International HR department overcome these challenges? 4. What lessons could be learnt from this case in terms of level of HR involvement in international expansion decisions?

(c) 2009 by Nelson Education Limited.

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