GLOBAL

HUMAN RESOURCE
MANAGEMENT
Human Resource Management

It refers to the activities an organization carries out

to use its human resources effectively.
These activities include:
i. Determine firm’s HR strategy
ii. Staffing
iii. Performance Evaluation
iv. Management Development
v. Compensation
vi. Labour relations
 Importance of HRM
i. Related to the strategy of the firm.
ii. Influence on the character,
development, quality and
productivity of firm’s HR
iii. Helps firms to achieve strategic
goal of reducing cost of value
creation
iv. Helps firms add value by serving
customer needs better.
How different is Global HRM?
Several key factors make Global HRM
different from domestic
management:
i. Different labour markets
ii. Mobility problems: legal, economic,
cultural barriers
iii. Different management styles
iv. Varied compensation practices
v. Labour laws.
 Key Issues
i. How to staff key management posts
in the Co.?
ii. How to develop managers, who can
do business in different countries?
iii. How to compensate people in
different nations?
iv. How to evaluate the performance of
managers in different countries?
v. Expatriate managers
Strategic role of Global HRM

STRUCTURE INCENTIVES & CTRL

PEOPLE

PROCESSES CULTURE
 Strategic Role of Global HRM
 Strategy is implemented through
organizational architecture.
 Right people at right postings.
 Effective training to acquire right skill set to
help perform jobs effectively.
 Behaviour, congruent with the desired
organizational culture.
 Compensation must create incentives for
actions inline with the strategy.
 Performance appraisal to measure the
behaviour, firm wants to encourage.
 I. Staffing Policy
Staffing policy is concerned with the
selection of employees for
particular jobs.

i. Selecting individuals who have the

skill to do a particular job.
ii. Tool for developing and promoting
the desired corporate culture
(norms & value system) of the firm.
 Types of staffing policies
There are three types of staffing
policies in IB:
i. Ethnocentric approach
ii. Polycentric approach
iii. Geocentric approach
 i. Ethnocentric approach
 All key management positions are filled by parent –
country nationals.
 One’s own culture is superior
 Overlooks important cultural factors
 Host country lacks qualified professionals
 Maintain a unified corporate culture
 Create value by transferring core competencies
 Limits advancement opportunities for host country
nationals
 Leads to resentment, lower productivity, and high
turnover in employees.
 E.g.: Procter & Gamble, Toyota and Matushita
 ii. Polycentric approach
 Decentralized control
 Business Units in different countries have autonomy from
home office, like a local Co.
 No standard forms or procedures
 Recruits host country nationals to manage subsidiaries,
while parent country nationals occupy key positions at
corporate HQ.
 Firm is less likely to suffer from cultural myopia.
 Less expensive to implement
 Host country nationals have limited opportunities to gain
experience outside their own countries
 Gap due to language barriers, cultural differences may
isolate corporate HQ from foreign subsidieries.
 iii. Geocentric approach
 It seeks the best people for key jobs, throughout the
organization, regardless of nationality.
 Hybrid of Ethno and Poly
 Based on informed knowledge of home and host
countries.
 Enables firms to make best use of its HR
 Helps the firm to build a cadre of international executives,
who feel at home working in No. of countries.
 Helps building a strong unifying corporate culture and
informal management network.
 Reduces cultural myopia
 Enhance local responsiveness
 Expatriate Managers
• Expatriates are citizens of one
country, who are working in another
country.
• Inpatriates is a subset of expatriates
who are citizens of a foreign
country, working in the home
country of their multinational
employer. (e.g., citizen of India, who
moves to U.S to work for Microsoft)
 Expatriate selection
Four dimensions that predict success in a foreign posting:
• Self orientation – self esteem, self confidence, mental
well being, adapt their interest in food, sports, music and
hobbies.
• Others orientation – ability to interact with host country’s
nationals, relationship development and willingness to
communicate by learning local language.
• Perceptual ability – to understand the particular
behaviour of people in host countries, empathise.
• Cultural toughness – relationship between country of
assignment and how well an expatriate adjusts
 II. Training and Management
Development
 After selection, the next step is training the
manager to do the specific job.
 MDP is a broader concept, it is intended to
develop a manager’s skills over her career in the
firm, e.g., sending managers on various foreign
postings over years to build her cross cultural
sensitivity and experience.
 To enhance management and leadership skills of
executives.
 MDP have a strategic purpose, and helps
reinforce desired culture of the firm by creating an
informal network.
 Types of training
i. Cultural training – understanding the
culture of host country, enhance
effectiveness, familiarization trip before
formal transfer.
ii. Language training – manager’s ability to
interact, help build rapport and improve
manager’s effectiveness.
iii. Practical training – adjust to day to day
life in host country, establish a routine,
successful adaptation, support network
of friends
 III. Performance Appraisal
 These are the systems used to evaluate the performance of
managers against some criteria, that the firm judges to be
important for the implementation of strategy and attainment
of competitive advantage.
 Important elements of control system.
 2 groups evaluate the performance of Expatriates, - Host
country managers and home country managers.
 Biasness by cultural frame of reference and expectations
 Unfair evaluation
 Due to proximity, onsite manager should evaluate soft
variables of expatriate’s performance.
 Consultation of home country manager to balance out.
 IV. Compensation
 National differences in compensation
 Payments according to global standards or
country specific standards.
 Issues in compensation practices:
i. How compensation should be adjusted to
reflect national differences in economic
circumstances and practices?
ii. How should the expatriate managers be
paid?
 Expatriate Pay
 Acc. To “Balance Sheet Approach”, it
equalizes purchasing power across
countries so employees can enjoy the
same living standard in their foreign
posting, as the enjoyed at home.
 It also provides financial incentives to
offset qualitative differences between
assignment locations.
 Components of a typical
compensation package
i. Base Salary – in same range as base salary for similar
position in home country.
ii. Foreign Services Premium – extra pay to work outside
country of origin. Offered as inducements to accept
foreign postings. Compensates for living in an unfamiliar
country.
iii. Allowances –
a) Hardship allowance – difficult location, where basic
amenities like health care schools, etc are deficient.
b) Housing allowance – to afford same quality of housing
c) Cost of living allowance – maintain std. of living
d) Education Allowance – expatriate’s children receive
same std. of education as in home country
iv. Taxation
v. Benefits – Medical, pension, etc.
Thank You