II JAI SRIGURUDEV II

Sri Adichunchanagiri Shikshana Trust

SJB INSTITUTE OF TECHNOLOGY

International Human Resource Management

20MBAHR403

Prepared by
Dr. Roopa Temkar V
Associate Professor
MBA Department
SJBIT

Department of MBA
BGS Health & Education City
Dr. Vishnuvardhana Road, Kengeri, Bengaluru - 560 060.
Tel.: 080 - 2861 2445 / 46 Fax : 080 - 2861 2651
Web.: www.sjbit.edu.in
 International Human
Resource Management
20MBAHR403
Dr. Roopa Temkar V

INTRODUCTION TO IHRM
 IHRM- Definition
 International Human Resource Management is the
procurement, allocation, utilization, and motivation of
human resources in international business.

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 IHRM-contd..
 1. Broad human resource activities of procurement,
allocation, and utilization.
 2. The national or country categories involved
– The host country where subsidiary country may be
located
– The home country where the firm is headquartered
– Other countries that may be the source of labor, finance
and other inputs.
 3. The three categories of employees
– Host country nationals (HCNs)
– Parent country nationals (PCNs)
– Third country nationals (TCNs)
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 A model of IHRM

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 Reasons for going global
1. International Opportunities
2. Reactive reasons

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Factors Influencing IHRM
 Globalization of Production:
Globalization of Markets:
Falling Barriers to Trade and Investment:
Technological Innovation:
Opportunities for internationalization
1. Exports/Imports
2. Turnkey Projects
3. Franchise
4. Joint Ventures/Mergers/Acquisitions/ Strategic
Alliances
Objectives of IHRM
 To develop more and better handle of global business operations
 To develop managerial skills, organizational knowledge and
technological abilities of HR managers and employees
 To manage and secure the performance, compensation and career path
of employees
 To manage and organize cross cultural counseling and language
training programme
 To develop more feasible understanding of work practices at global
levels
 To raise and develop better and new performance management of
human resources
 To get more and more opportunities within global scenario
 To reduce the cultural differences as amicable for cultural environment
 Approaches to IHRM

 Ethnocentric
 Polycentric
 Geocentric
 Regiocentric

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 Approaches IHRM

Inter-relationships between approaches in the field

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 Difference between domestic and
international HRM
 1. More HR activities- International taxation,
international relocation and orientation,
administrative services for expatriates, host-
government relations, and language and
translation services.
 The need for broader perspective
 More involvement in employee‟s personal
life

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 Difference between domestic and
international HRM
 Changes in emphasis as the workforce mix
of PCNs and HCNs varies.
 Risk exposure
 Broader external influences- Government,
State of economy, generally accepted
practices of business, Labor cost
 Differential compensations
 Diversity management

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 Global managers

 Greater need for global mindset

 Balancing contradictions and live with conflicts
 Orientation towards continuous change
 Ability to absorb cultural shock and attempt to
minimize its severity
 Political, economic, and social sensitivity and
knowledge of many countries
 Leadership

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 Variables that moderate differences between domestic and
international HRM
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 The cultural environment

 What is culture?
 Cultural shock – A phenomenon experienced
by people who move across cultures.
– Need to adjust in relatively short time
– Challenge to frame of reference
– Misunderstanding or inability to recognize cues
– Negative feelings about host country

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 The importance of cultural
awareness
 Culturally insensitive attitudes and behaviors
stemming from ignorance or from
misguided beliefs not only are inappropriate
but often cause international business
failure.
 Myth- What works at home will work here

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 Industry Type
 Porter- Industry in which a multinational firm
is involved is of considerable importance
because patterns of international competition
vary widely from one industry to another.
 Multidomestic industry – Competition in each
country is essentially is essentially
independent of competition in another
countries – Retail, Insurance, Distribution

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 Industry type

 Global industry- Competitive position in one

country is significantly influenced by its
position in another country.
– Airlines
– PCs
– Consumer electronics

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 Porter’s value chain

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 Porter’s value chain

 In Porter‟s model HRM is seen as one of the

four supporting activities for the five primary
activities of the firm.
 Since human resources are involved in each
of the primary and support activities, the
HRM function is seen as cutting across the
entire value chain of the firm.

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 Industry type

 Multidomestic industry
– Role of HR will be more of domestic in
structure and orientation.
– Support primary activities in each domestic
market to achieve competitive advantage through
either cost/efficiency or through product/service
differentiation.

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 Industry type

 Global industry
– HRM function structured to deliver the
international support required by the primary
activities of the multinational.

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 Reliance of the multinational on
its home-country domestic
market
 Size of the domestic market
 No US industry in top 15 MNC‟s with higher ratio of
foreign assets to total assets and foreign sales to
total sales.
 A large domestic market will also influence the
attitude of senior managers towards their
international activities, and will generate a large
number of managers with an experience base
predominantly or exclusively domestic market
experience.

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 Complexity

 Increasingly complex environment

 Need of right people
 Need of good IHRM practices
 Problems
– Lack of understanding of the essential differences in
managing human resources, in foreign
environments
– Certain management philosophies and techniques have
proved to be successful in the domestic environment,
but often their application in a foreign environment leads
to frustration, failure and underachievement.
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 Complexity

 More complexity due to political, and

economic changes.
– Gulf war
– SARS
– Regional integration

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 Reasons for emergence of IHRM

 Global competition
 Growth in mergers, acquisitions and alliances
 Organization restructuring
 Advances in technology and telecommunication
 Levels of competition are increasing with the spread
and diversity of international business.
 Issues related to business ethics
 Downsizing

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 Matching Model of HRM

 Highlights the resource aspect of HRM

 Emphasize on efficient utilization of human
resources to meet organizational objectives.
 Right fit between organizational strategy,
organizational structure and HRM systems
will result in success.

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 Models of IHRM

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 Harvard Model

 Focuses on Human, Soft aspect of HRM

 It emphasizes in employee-employer relationship
 Also highlights the interests of different stakeholders
of organization-shareholders, management,
employee groups, government, community, unions
 How these interests can be related to objectives of
management?

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 Harvard Model
 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

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 Harvard Model

 These outcomes consequently produce long-

term and sustainable benefits for the
individual, the organization and society.
 This is a highly prescriptive model of HRM
which emphasizes a number of presumed
long-term benefits of acting on
stakeholder interests and situational
factors, assuming that there is a set of
predetermined and
„superior‟ human resource policy choices
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 Harvard Model

 The Matching and Harvard models

were often compared and contrasted in
terms of their approaches to the use of
human resources.
 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.
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 Contextual Model

 Organizations may follow a number of different

means to achieve same results.
 This is due to existence of linkage between external
environment context-Socio-economic, technological,
political-legal and competitive, and internal
organizational context-culture, structure, leadership,
task, technology, and business output.
 The linkage will determine content of organization‟s
HRM

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 5-P Model

 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.

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 The Five P’s Model of SHRM

 Philosophy
– Statements of how organization values and treats
employees; essentially culture of the
organization
 Policies
– Expressions of shared values and guidelines for
action on employee-related business issues
 Programs
– Coordinated and strategized approaches to
initiate, disseminate, and sustain strategic
organizational change efforts necessitated by
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strategic business needs
 The Five P’s Model of SHRM

 Practices
– HR practices motivate behaviors that allow
individuals to assume roles consistent
with organization‟s strategic objectives
– Three categories of roles:

 Leadership
 Managerial
 Operational

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 The Five P’s Model of SHRM

 Processes
– Continuum of participation by all
employees in specific activities to
facilitate formulation and
implementation of other activities

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 European Model

 It is based on the argument that European

organizations are constrained at both international
(European Union) and national level by national
culture and legislation.
 They are also constrained at the organizational level
by patterns of ownership and at the HRM level by
trade union involvement and consultative
arrangements.
 All the constraints need to be considered for forming
a HR system.

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 Models of SHRM in Multinational Companies ,
 Successful SHRM efforts begin with identification of
strategic needs
 Employee participation is critical to linking strategy
and HR practices
 Strategic HR depends on systematic and analytical
mindset
 Corporate HR departments can have impact on
organization‟s efforts to launch strategic initiatives

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 Internationalization of HRM

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 Stages of Internationalization

 Stage 1: Domestic Operations

– Firms offer products or services that are designed to
primarily serve consumers in the domestic market (e.g.,
law firms)

 Stage 2: Export Operations

– Products and services are opened up to markets in other
countries, but production facilities remain in Canada
(e.g., McCain Foods).
– HRM: Provides sales force with skills and motivation
to succeed in these foreign markets.

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 Stages of Internationalization

Stage 3: Subsidiaries or Joint Ventures

 Some operational facilities (e.g., parts assembly) are
physically moved to other countries.
 Corporate headquarters in home country has high
control over foreign operations.
 HRM: Provides expatriates and local employees with
knowledge and skills to succeed in the foreign
country.

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 Stages of Internationalization

Stage 4: Multinational Operations

 Much more prevalent international dispersion of
production and service provision facilities.
 Decentralization of decision-making more prevalent,
but “major” personnel decisions still made within
home country.
 Expatriates still primarily manage foreign facilities.

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 Stages of Internationalization

Stage 5: Transnational Operations

 Little allegiance to the firm‟s country of origin.
 Large-scale decentralization of decision-making.
 Dominant role of expatriates is removed.
 Each business unit across the globe has the
freedom to make and implement its own HRM
policies and practices.

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 Socio-cultural context
 An awareness of cultural differences
 HR activities may all be affected by cultural values
and practices in the respective host countries.
 great care must be taken when deciding whether or
not to adopt standardized HR policies and practices
throughout the world.

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 Organizational dynamics and IHRM:
Role of culture in International HRM
 Cross-cultural leadership
 “emphasizes differences and similarities of values
and behaviors among countries.”

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 Culture and employee management issues

 Managing the expatriate‟s adjustment process

 The difficulty of task
 higher use of host country and third country
management
 There is a concurrent increase in the
number of inpats

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 Organizational Processes in IHRM,
Multinationals
Stages of development and
Its operating
philosophy

Types of employees Environment of

Countries
HCN, PCN, & TCN
IHRM Economic, political,
Legal and labor laws

HR Processes

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 Linking HR to International
expansion strategies,

 Internal fit: making sure HRM policies facilitate the:

work values and motivation of employees
 External fit: the degree to which HRM matches the:
context in which the organization is operating

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 The Challenges of International Human
Resource Management
 Developing a global mindset inside HR
 Aligning core HR processes and activities
 Enhancing global competencies and capabilities of
HR
 High failure rates of expatriation and repatriation

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 contd
Deployment getting the right mix of skills in t he
organization
 Knowledge and innovation dissemination-
•It’s too easy to accidentally break local laws
• Cultural differences cause professional
misunderstandings
• It’s hard to create an international human connection

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 Bibliography
Sl.
Particulars Book Title Book Author Book Publications
No.

International Human Resource Oxford University

1 Monir H. Tayeb,.
Management Press, 2005

International Human Resource Peter J. Dowling, Denice E.

2 Cengage Learning
Management Welch,
Prescribed Books
Human Resource Information
Systems: Basics, Applications, and
Michael J. Kavanagh, Mohan Richard D. Johnson
3 Future Directions: Basics,
Thite SAGE, 2011, 2/e
Applications, and Future
Directions,

International Human Resource Excel Books,

4 P. L. Rao
Management: Text and Cases Reprint
Reference Books
International Human Resource Dennis Briscoe, Randall
5 Management: Policies and Schuler, IbraizTarique, Taylor & 2012, 4/e
Practices Francis,