International Human Resource Management: Tribhuvan
International Human Resource Management: Tribhuvan
International Human Resource Management: Tribhuvan
Management
Tribhuvan
[email protected]
Trends in the International Division of
Labor
The logical consequence of the theories is that a country
would do well to concentrate on the production of those
goods and services in which it has a competitive
advantage.
Reich’s : In his book the work of nations. Preparing
ourselves for 21st century capitalism.
The most important objectives for companies including
multinational companies – satisfy market demand and to make
profits.
Countries that have nothing to offer in international
competition are doomed to lose out badly.
First world countries that do not have a supply of cheap labor
will have to concentrate on the production of more
specialized products with a high knowledge and capital
content.
This will result in an increasing demand for highly educated
and creative people
Proper education for all citizens is absolute prerequisite for
future prosperity in any country
Main reasons for IHRM
Globalization – increased mobility of HR
Rapidly developing economies (RDEs)
Low wage and low cost countries
Changing demographics
Regional trading blocks
Technology
Effective management of HR – determinant of success or
failure in international business
Failure in international assignment – costly in human and
financial terms
Growth in mergers, acquisitions and alliances
Status of IHRM
In 1980s IHRM was in the infancy stage of development
Most of the research was focused on international
production and international marketing
Late 1990, researchers started looking at IHRM
But most of the research conducted by US researchers
from an American rather than an international
perspective
IHRM literature suffered from the conceptual and
normative limitations
What is IHRM?
HRM refers to those activities undertaken by an
organization to utilize its human resources effectively.
These activities would include at least the following:
Human Resource Planning
Staffing (recruitment, selection, placement)
Performance Management
Training and Development
Compensation and benefits
Industrial Relations
IHRM is the interplay among the three dimensions – HR
activities, types of employees and countries of operation.
A model developed by Morgan presents IHRM on three
dimensions HR Activities
Utilize
Allocate
Other
Procure
Types of Employees
Terms to be known
Expatriate
Repatriate
Inpatriate
Transpatriate
Expatriate
an employee who is working and temporarily residing in a
foreign country.
Short-term assignment living in host country while remaining a
citizen of one’s home country
Repatriate
When expatriate comes back from foreign assignment
Inpatriate
Relocated to the parent country headquarters
Transpatriate
PCN, HCN, TCN
Transferred to international assignment in transnational firms
Approaches to IHRM
The field of IHRM is characterized by three broad approaches.
Cross-cultural management - examining human behavior within
organizations from an international perspective
Comparative industrial relations and HRM – compare and analyze
HRM systems in various countries
HRM in the Multinational firms
HRM in Comparative
Cross-cultural
multinational HR and IR
management
context systems
Domestic and International HRM
Factors IHRM HRM
HR Activities
Taxation Domestic & International Domestic
Relocation and Arranging for pre-departure Less time is required than
orientation training, providing immigration IHRM
and travel details, providing
housing, shopping, medical care
etc.,
Administrative Time-consuming and complex Policies and procedures are
services activity because policies and clear and less conflict
procedures are not always clear-
cut and may conflict with local
conditions
Government Work permits and other Not essential unless for
Relations important certificates international assignments
Language To provide translation services Not required
translation to all foreign operation
departments within the
multinational
Factors IHRM HRM
Broader Perspective International perspective National / domestic
Ex: employees are covered by perspective
complex compensation policy Ex: employees are covered
by uniform compensation
policy
Involvement in Necessary for the selection, training Limited
employees personal and effective management
lives Ex: some governments require the
presentation of a marriage
certificate before granting a visa to
an accompanying spouse.
Risk exposure Expatriate failures Limited
Terrorism
Broader External Government, economy etc., Limited
influences
Models of IHRM
HRM has generally been viewed from two different
perspectives:
Hard and Soft models
Hard model
According to Hard model, reflecting utilitarian (useful)
instrumentalism (predictions)
HRM is used to drive the strategic objectives of the
company
It is argued that it ignores fundamental differences
between people and other resources
Production resources can be moved around, shuffled,
reduced, increased, transformed and discarded.
But humans have emotions, interests and attachments and
perform their tasks if they are satisfied. They cannot be easily
discarded and shuffled around against their wish.
Soft Model
According to Soft Model, HRM is developmental
humanist (dignity and worth of individual) view
Treating employees as valued assets
Proactive inputs in production processes and capable of
development
Many companies employ both soft and hard models
Ex: managers, core employees and skilled workers may be
treated according to the soft model and casual or unskilled
workers according to hard model.
Hard model - when economic downturns and high
unemployment
Soft model – full employment
Other Models
Matching Model
Harvard Model
Contextual Model
5-P Model
European Model
Matching Model
Highlights the resource aspect of HRM
Emphasizes the efficient utilization of HR to meet
organizational objectives
‘Right fit’ between organizational strategy, organizational
structure and HRM systems
Harvard Model
Stresses the soft aspect of HRM
More concerned with the employer-employee relationship
It highlights the interests of different stakeholders in the
organization and how their interests are related to the
objectives of management
Contextual Model
Based on the premise that organizations may follow a number
of different pathways in order to achieve the same results.
This happens because organizations has a number of linkages
between external and internal environment
These linkages contribute directly to forming the content of an
organizations HRM
5-P Model
HR activities
Philosophies
Policies
Programmes
Practices
Processes
This model shows interrelatedness of these activities and
explains their significance in achieving the organizations needs
European Model
Based on the argument that European organizations are
constrained at both international and national level by national
culture and legislation
These constraints need to be accommodated while forming a
model of HRM
Models of SHRM in Multinational
Companies
There is a growing need for a better understanding of the
relationship between international strategy and HRM
It has been argued that the fundamental strategic problem
for top managers in international firms is balancing the
economic need for integration with the pressures for
local responsiveness
The central issue for MNCs is not to identify the best
IHRM policy but rather to find the best fit for the firms
strategy, structure and HRM approach.
International human resources are a strategic resource,
which should affect strategy formulation as well as its
implementation.
We have two classic models of Strategic International
Human Resource Management
Adler and Ghadar’s Phases of Internationalization
De Cieri and Dowling integrative framework of strategic HRM
in MNC’s
Adler and Ghadar’s Phases of
Internationalization
This model is based on Vernon’s Life cycle.
First Phase (high tech) focuses on the product, R&D
Second Phase (growth and internationalization) concentrates on developing
and penetrating markets
Third Phase (maturity) intense efforts are made to lower prices by
implementing cost control measures.
According to Adler and Ghadar, the average length of the PLC after the
second world war was 15-20 years
Now it is 3-5 years. For some products, it is as short as 5 months
This resulted to fourth phase (differentiation and integration) way to
develop and penetrate markets and to achieve cost control
This model is linked to culture and HRM
De Cieri and Dowling Model
IHRM activities in MNCs are influenced by both structure
(endogenous) and strategy (exogenous).
Exogenous Factors
Industry characteristics
Country-regional characteristics
Inter-organisational networks
orientation
Internationalization of HRM
The evolution of management
thoughts and theories shows that:
in the early parts of the 20th centaury – organizations
operated and argued for a universalistic ‘one best way’
of organizing work is – Bureaucracy
in 1950s and 1960s – researchers of management
challenged this universalistic view – human relations
Next, there were challenges on the grounds that different
technologies require different styles of management –
contingency theory – survival of an organization
depends upon its efficient and effective performance –
organization responds and adapts to its environmental
demands.
But still national culture is significant and cannot be
ignored – organizational performance
Culture
Customs
Beliefs
Norms
Do’s and Don’t’s
Binding
Passed on from GENERATION to GENERATION
Dominant Culture
National
Sub Culture
Regional
Organization Culture
Organizational
Occupational Culture
Professional
National Culture
Culture refers to values and attitudes that people
belonging to a given society
Values learned and shared by the members of a given
community
Cloth, food, ways of greeting and meeting, ways of
working together, ways of communicating etc.,
Culture and Employee Management
Issues