Ihrm - Module 1
Ihrm - Module 1
Ihrm - Module 1
International
Human Resources
Management
Evolution of IHRM
• IHRM got it importance after 1990 (international business stage)
• Till 1990 the subsidiary in foreign countries were managed by the home
country- all the post were filled by home country employees.
• But after 1990 companies started filling their vacancy/positions not only
from home country but started giving importance to host country and also
for third country nationals.
• Companies stated giving importance for knowledge and skills of
employees not the place of employees.
• But still many companies till today the top positions are controlled by
home country nationals
Regarding evolution of IHRM Evans et al (2002)state that three distinct phases can be
identified in the history of this field:
• The first, so called pre scientific period :the beginning of the 20thcentury. were already
some international ventures (eg. the East Indian Corporation, or the shipping
companies), but during these years IHRM was not in the focus of management
attention.
• first real era of IHRM dates back to the period when the first companies established
their offices and Subsidiaries abroad. At the beginning of World War I dozens of
companies Operated already on an international field. The globalization of business
forced companies to send expatriates into management or consultant positions to their
foreign concerns. By the 1960's the 180 examined American companies had an average
of 6 subsidiaries abroad (Evans et al, 2002). This significant growth urged companies to
increase the number of their expatriates to a great extent.
• War veterans, who spoke foreign languages, were not always the appropriate persons, who
would be able to transfer knowledge and experience abroad. In this 2ND period it became clear
that in order to be successful in globalization it is indispensable to adapt various national
cultures. In the above period knowledge sharing between headquarters and foreign concern
had a typical hierarchical form. The direction of knowledge flow was from headquarters or
regional centers to subsidiaries.
• The third period of IHRM started at the end of the 1980's, when globalization became even
stronger. As a result of globalization companies were striving even stronger to implement
network based solutions, instead of hierarchical knowledge transfer and coordination. A
special feature of this localization procedure was that the HRM departments were mainly led
by locals even at the time when other management positions were rather filled by foreign
managers. Besides expatriates more and more inpatriates appeared in multinational companies
(that is, locals delegated from subsidiaries to headquarters).
Scullion (1995,)points out is of growing importance for number of reasons:
1.Recent years have seen a rapid increase in global activity and global competition's the MNCs
increase in number and influence, so the role of international HRM in those companies grows
in significance.
• To a large extent the successful implementation of global strategies depends on the existence
• Business failures in the international arena may often be linked to poor management of human
resources
Definition of IHRM
• According to Peter Dowling –
• Scyllion defined IHRM as “the HRM issues and problems arising from the
internationalization of business, and the HRM strategies, policies and
2.Globalization of Production:
4.Technological Innovation:
5.Globalization competition
6.Custmer demand
10.incentives
The different setting/STAGES of International Human
Resource Management.
1.Global competition
3. Organization restructuring
5.Global competition
6.Levels of competition are increasing with the spread and diversity of international
business.
8. Downsizing
9. issues related to business ethics and social responsibility has become major concern
for HR manager
Difference
Domestic HRM International HRM
• Employees from different countries.
• Employees within one national
boundary. • constant attention on adjustment matters in
living conditions and work ethics.
• Routine work pattern.
• Compensation based on taxation matter and
parity of emoluments with equivalents in
organization.
• Not much difference and variation
in compensation
• Public relation taken upmost care by proving
various facilities to its employees like health, get
• Public relations work taken care school admission etc .
by employees themselves.
• the nationals of the host country are recruited for the managerial positions to carry out the operations of the
subsidiary company.
• this approach is to reduce the cost of foreign operations gradually.
• The rationale behind this approach is that the locals of the host country know their culture better and can
run the business more efficiently as compared to their foreign counterparts.
Matching
Harvard module
module
Contextual
module
5-p module
European
module
Models of IHRM
1. Matching model (utilization of human resource – right fit of employees)
2. Harvard model (employee-employer relationship)
3. Contextual model (linkages b/n internal and external environment)
4. Five P’s model (5 HR activities – Philosophy, Policies, Programs, Practices,
Processes)
5. European model (follow the European orgn policies – They are constrained
with both international and national level of culture and legislation. Trade
union involvement and consultative arrangement are the two important HRM
activities they follow)
Matching model
• Matching model was developed at Michigan Business School by Fombrun, Tichy and Devanna et al.
• Matching model illustrates that the strategic HRM emphasizes on the relationships between human
resource management, organizational structure and strategy and the environment external like political
forces, economic forces ,cultural forces to an organization .
• It suggest the people in organization are managed accordingly to organizational requirement of quality and
effectiveness.
3. Right fit between organizational strategies, organizational structure and HRM systems will result in
success.
1.All organizational controllers act rationally as per matching model but as many
critical organizational theorists attest ,strategic decisions are not necessarily based on
the output of rational calculation.
2.The matching model categorized as a “hard” model of HRM Because it over looks
“human aspect" of HRM and does not take into account of significant variations in
power, policies and culture.
3.To further pursue the question whether a matching of business and HRM strategies is
necessary desirable. Boxall argues that “excessive fit” can be disadvantageous to
gaining competitive advantage .it can make a company inflexible and capable of
adapting quickly to the external environment.
Harvard Model
• Harvard Model developed by Harvard University by prof.Michael Beer.
The model illustrates the influence of situational factors on stake-holder interests, and their
impact on human resource policy choices which are destined to deliver a raft of
predetermined human resource outcomes such as commitment, competence, congruence and
cost-effectiveness.
1. Harvard Model opens a avenues for a sophisticated analysis of how the people management
2. these outcomes consequently produce long-term and sustainable benefits for the individual, the
3. The Matching and Harvard models were often compared and contrasted in terms of their
approaches to the use of human resources
4. While the Matching model focuses on the strategic resource aspect of human resources the Harvard
model emphasizes the human element in the human resource formulations
• Limitation :
1.Model has been criticized for not explaining the complex relationships between strategic
management and HRM.
2.By outlining a range of policy choices and not recommending specific approaches, this model is
descriptive rather than prescriptive and therefore there is absence of a coherent theoretical basis
for measuring the relationship between HR inputs, outcomes and performance.
Contextual Model
Outer context
1.Technical
2.Politica l-legal
3. competitive
Inner context
1.Culture
2.Structure
3.Political /leadership
4.Business output
HRM Context
1.HR flows
2.Work systems
• Organizations may follow a number of different means to achieve same results.
The frame work is defined by two components ,the external context (socio-economic,
technological, political –legal and competitive) and internal organizational context (culture,
2.A potential problem that can arise from this approach is that personnel
policy and practice the dependent variable of the analysis and outcome such as
company performance become the independent variable .besides, different
views and interests of management and employees can influence the
interactive process.
5-p Model
HR Philosophy
Expressed in statement defining business values and culture
HR Policies
Express as shared values
HR Programmmes
Articulated as HR strategies
HR Practices
For leadership, managerial and operational roles
HR Processes
For the formulation and implementation of other activities
Links five human resource activities-philosophies, policies, programmes, practices, and processes
with strategic needs.
• These activities are Interrelated They are significant in achieving organization‘s needs.
1.Philosophy-Statements of how organization values and treats employees; essentially culture of the organization.
2. Policies -Expressions of shared values and guidelines for action on employee-related business issues .
3. Programs –Coordinated and strategized approaches to initiate, disseminate, and sustain strategic organizational
4. Practices – HR practices motivate behaviors that allow individuals to assume roles consistent with organization‘s
5. Processes -Continuum of participation by all employees in specific activities to facilitate formulation and
• They are also constrained at the organizational level by patterns of ownership and
at the HRM level by trade union involvement and consultative arrangements.
• A trend over the past few years has been to identify the
linkage of human resource management with strategy not only
on the national level but also on the international level.
Types of strategy
1. Corporate level strategy (what type of
business)
2. Business level strategy (how to implement
and compete the choose business)
3. Functional level strategy (departmental level
strategy)
A Model of strategic HRM in multinational enterprises.
DEVELOPED BY SCHULER,DOWLIND AND DE CIERI (1993)
1.These external factors exert direct influence on internal organizational factors ,HRM
strategy and practices and multinational concerns and goals.
2.The internal organizational factor are shown in order of most tangible to intangible .
5.variatio 6.Percepti
ns factors 1.Political on of HR
2.Econom
& Legal
ic factors
Factors
4.Labor/
Management
3.Cultural
Relations
factors Factor
1. Political & Legal Factors:
Throughout the world, the political & legal systems are diversified. The organizations deal with the political & legal
systems that are fairly stable, particularly in the developed countries of Europe. On the other hand, in certain other
countries, there are relatively unstable political & legal systems. The governments of certain countries face coups,
corruption & dictatorial rules that are all badly affecting the legal & business environment. Due to internal politics,
the legal systems in certain countries are also becoming unstable. In this way the variations in the political & legal
systems around the world become as a hurdle in the effective global human resource management.
2. Cultural factors:
Every country has its own unique culture which is slightly similar to the cultures of other countries of the world. The
global human resource management should apply such policies & procedure in the organization which are in
accordance with the local culture of the country or region. Even most of the employees of the foreign subsidiary
should be hired from the host country. There may be certain cultural norms that are allowed in one country but are
prohibited in another country. So, cultural factor becomes a barrier for the smooth working of the global human
resource management of any organization. Therefore the expatriates of the organization should also take into
account the cultural norms & values of the host country to some extent. The management should make ensure that
the implemented wider corporate culture is being followed in all the subsidiaries of the globally operating
organization.
3.Economic Factors:
The economic factor is also regarded as a barrier for the effective global human resource management
because there is not any single economic system operating globally. In case of the capitalist system, the
efficiency & productivity are focused by the management of the organization by making such policies &
procedures that promote efficiency. On the other system of economics, which is the socialist, the
productivity & efficiency which is definitely harmful for the organization. So before development &
implementation of any human resource policy or practice of the management of the organization, the
economic barrier of the global operations should be properly comprehended by the organization. Moreover,
the difference in the labor costs around the world becomes a serious problem for a global business
The policies & procedures of the global human resource management are affected by the relations of workers
& employees with the management because the nature of these relations varies from one country to another
6.Percetion of HR :in one country HR may be perceived as true business partner, working with
high-level managers on critical strategic assessments .in another country or within same
country HR may be viewed as a transactional personnel department that handles
administrative work
SOCIO-CULTURAL CONTEXT :
• Social environment of business means all factors which affects business socially . Every
business works in a society , so societies different factors like family , educational institutions
and religion affects business . It includes the culture that the individual was educated or lives
in, and the people with whom they interact.
------- Society is nothing but an organized group of people who live together and
are connected with one another. Society is the bigger, cooperating social group with an
organized sense of relationship
• The cultural factors like buying and consumption habit of the people, customs and traditions,
tastes and preferences, languages etc. are the factors that affect the strategy of the business
---------Culture has certain values, custom, beliefs and social behavior. its a part of society.
• Socio-cultural environment :A setoff beliefs, customs, practices
and behavior that exists within population. International companies
often include an examination of the socio-cultural environment
prior to entering their target markets.
• The normal HR activities such as recruitment and selection, training and development, reward
and performance appraisal, may all be affected by cultural values and practices in the
respective host countries
Chapter 2
Country and Regional Cultures
• Definition of society
similarity among people a cause -- and effect – of national
boundaries Way to bound and measure culture for conduct of
business.
• culture is a key characteristic of society.
• can differ significantly across national borders also within
national borders.
• laws are established along national lines
• Culture is both a cause and an effect of economic and political
factors that vary across national borders
Country Culture versus MNE Culture
1.Dimensions
• When establishing an office overseas, consider cultural differences across
four dimensions: individualism/collectivism, uncertainty/avoidance,
masculinity/femininity and power distance, according to a paper on the
Association to Advance College Schools of Business web site
2.Family Ties
• Cultures also differ in their views of family and business. In the United
States, a manager who hired her brother might well be accused of unethical
nepotism. However, many Latin American cultures consider skipping over
qualified relatives to hire a stranger to be silly.
3.Training
• Small multinational businesses must change the culture in their own U.S.-based
headquarters to be nimble enough to compete cross-culturally. One way is to
adopt a training culture. Training could include presentations on cultural
differences, as well as incentives to encourage employees to travel to countries
where you have offices.
4.Unified Culture:
• Multinational companies also must strike the balance between honoring
all cultures while still ensuring employees from all offices are united toward a
common mission. One way to do this is to create a community culture across all
offices. Online collaboration tools or social media
• groups also can link employees from all cultures to common mission.
Culture and employee management issues / impact of
country culture on IHRM
• Managing the expatriate‘s adjustment process is a primary
focus of IHRM
• The difficulty of this task has increased because sales and
production shifted closer to markets.
• There is higher use of host country and third country
management.
• There is a concurrent increase in the number of inputs
• Both inputs and exports can have a difficult time adapting to
their new surroundings
• Selection , recruitment and training.
• Job expectations and motivations policies.