1. )Define international human resource management.

Compare and
contrast international human resource management with human
resource management.
CHAPTER 1 page 2 - 5
The definition of International Human Resource management begins with
defining Human Resource management. HRM refers to those activities
undertaken by an organization to effectively utilize its human resources. These
activities would include at least the following:
1

Human resource planning.

Staffing (recruitment, selection, placement).

Performance management.

Training and development.

Compensation (remuneration) and benefits.

Industrial relations.

The question is of course which activities change when HRM goes

international? international HRM as the interplay among the three dimensions of
human resource activities, type of employees and countries of operation. in
broad terms IHRM involves the same activities as domestic HRM (e.g.
procurement refers to HR planning and staffing). However, domestic HRM is
involved with employees within only one national boundary. Increasingly,
domestic HRM is taking on some of the flavor of IHRM as it deals more and more
with a multicultural workforce. Thus, some of the current focus of domestic HRM
on issues of managing workforce diversity may prove to be beneficial to the
practice of IHRM. However, it must be remembered that the way in which
diversity is managed within a single national, legal and cultural context may not
necessarily transfer to a multinational con- text without some modification.
complexity of operating in different countries and employing different
national categories of workers is a key variable that differentiates domestic and
international HRM, complexity of international HR can be attributed to six factors:
1

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. To operate in an international environment, a human resources
department must engage in a number of activities that would not be necessary
in a domestic environment. Examples of required international activities are:
l

international taxation;

international relocation and orientation;

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administrative services for expatriates;

host-government relations;

language translation services.

2.) Discuss the importance of studying the culture of countries. Identify the main
issues that this type of study raises for a human resource manager. chapter 2
page 39

There should be an adequate understanding of the cultural context of

IHRM, as it impacts the behavior of organizations employees, is of decisive
importance. Thus, results of cross-cultural comparative research may provide
valuable hints to managers about how to solve isses like coping with employees
of foreign cultures. Furthermore, they can form the basis for the development of
intercultural training measures. These results could also be of great use to HRM
in an inter national firm because it could assist a structured analysis about the
transferability of specific elements of the parent firms existing HR policy to
foreign subsidiaries. In this context, it would be conceivable to decide whether
incentive systems for groups or for individuals would be effective in a specific
culture.

3.) Discuss the following statement: All human resource management policies
should be standard across units of the international organisation. Chapter 3
page 48
Standardization of HRM practices is to reach the organisational consistency,
transparency and an alignment of a geographically fragmented workforce around
common principles and objectives.5 The use of common management practices
is intended to foster a feeling of equal treatment among managers involved in
cross-border activities and, at the same time, aims at a common understanding
of what is expected from the employees. Furthermore, consistent sys- tems
facilitate the administration processes by increasing operational efficiencies.
4.)Discuss the importance of international assignments. Identify the main issues
that such assignments raise for a human resource manager. Chapter 5 page 110140
Harzing states in her study that most of the reasons for international
assignment eventually lead to organization development. In fact, international
assignments are often undertaken to reach several goals simultaneously.
Furthermore, a study by Tungli und Peiperl, revealed that the importance of the
assignment objectives also differed by country-of-origin. For example, the

development of man- agement skills was one of the most important reasons for
international assignments in German MNEs whereas MNEs from the US mainly
sent managers abroad to fill local skill gaps. Japanese as well as British MNEs
indicated that the development of new operations abroad was their major reason
to send expatriates abroad.
Main issues that such assignments raise for a human resource manager
1.Candidate identification, assessment, and selection. In addition to the required
technical and business skills, key traits to consider for global assignments
include, for instance: cultural sensitivity, interpersonal skills, and flexibility.
2. Cost projections. The average cost of sending an employee and family on an
overseas assignment is reportedly between three and five times the employees
pre-departure salary; as a result, quantifying total costs for a global assignment
and deciding whether to use an expatriate or a local employee are essential in
the budgeting process.
3. Assignment letters. The assignees specific job requirements and associated
pay will have to be documented and formally communicated in an assignment
letter.
4. Compensation, benefits, and tax programs. There are many ways in which to
compensate employees who are transferred abroad, given the vast differences in
living expenses around the world.
5. Relocation assistance. The assignee will probably have to be assisted with
such matters as maintenance of the persons home and automobiles, shipment
and storage of household goods, and so forth.
6. Family support. Cultural orientation, educational assistance, and emergency
provisions are just some of the matters to be addressed before the family is sent
abroad.

International assignments do assist in knowledge sharing and competence

transfer, and encour- age adoption of common work practices which may
strengthen elements of corporate culture. Thus, they may contribute to further
developing the social capital within the MNE.57 Staff in various organizational
units also encounter different viewpoints and perspectives that will shape their
behavior and may reinforce their feeling of belonging.

5.) What issues do expatriate managers often face when they complete their
international assignment? What steps can a human resource manager take to
manage the return of an expatriate manager from an international assignment?
Chapter 7 pg 189 -208

Career issues upon re-entry are of particular importance to repatriates.

Factors that affect career anxiety are: no post-assignment guarantee of
employment; fear that the period overseas had caused a loss of visibility;
changes in the home workplace that affect re-entry positions; and the
employment relationship.
As more expatriates completed their assignments, firms were faced with
organizing these returns in a more planned pattern that allowed for a more strategic and complete use of the repatriates newfound experiences and insights,
while at the same time easing the return to their home country and firm.63

Re-entry into the home country presents new challenges. The repatriate is
coping with what has been termed re-entry shock, or reverse culture shock.
While people frequently expect life in a new country to be different, they may be
less prepared for the experience of returning home to present problems of
adjustment. As a consequence, it can be a surprising and traumatic experi- ence
for some64 perhaps more difficult than what was encountered in the foreign
location. From the MNEs perspective, repatriation is frequently considered as the
final stage in the expa- triation process (as indicated in Figure 7.4), but it is
important to note that the MNEs ability to attract future expatriates is affected
by the manner in which it handles repatriation.
Designing effective repatriation programs, including the use of mentors
and available forms of technology.
l
Viewing repatriation as part of the expatriation process, as suggested
below, should remind those responsible for expatriation management of the
need to prepare repatriates for re-entry and to recognize the value of the
international experience to both parties.
Preparation, physical relocation and transition information (what the MNE
will help with).
Financial and tax assistance (including benefit and tax
changes; loss of overseas allowance).
Re-entry position and career path
assistance. Reverse culture shock (including family disorientation). School
systems and childrens education, and adaptation.
Workplace changes
(such as corporate culture, structure, decentralization). Stress management,
communication-related training.
Establishing networking opportunities.
Help in forming new social contacts.

6. ) Assess the importance of local and national employment laws and practices
in determining the success or failure of international assignments. Chapter 8
page 216 - 220
To successfully manage compensation and benefits requires knowledge of
employment and taxation law, customs, environment and employment practices
of many for eign countries; familiarity with currency fluctuations and the effect of

inflation on compensation; and an understanding of why and when special

allowances must be supplied and which allowances are necessary in what
countries all within the context of shifting political, economic and social
conditions. The level of local knowledge needed in many of these areas requires
specialist advice and many multinationals retain the services of consulting firms
that may offer a broad range of services or provide highly specialized services
relevant to HRM in a multinational context.11
National and regional differences in the meaning, practice and tradition of pay
remain significant sources of variation in the international firm.

When developing international compensation policies, an MNE seeks to satisfy

several objec- tives. First, the policy should be consistent with the overall
strategy, structure and business needs of the multinational. Second, the policy
must work to attract and retain staff in the areas where the MNE has the greatest
needs and opportunities. Thus, the policy must be competitive and recognize
factors such as incentive for foreign service, tax equalization and reimbursement
for reasonable costs. Third, the policy should facilitate the transfer of
international employees in the most cost-effective manner for the firm. Fourth,
the policy must give due consideration to equity and ease of administration.
The international employee will also have a number of objectives that need to be
achieved from the firms compensation policy. First, the employee will expect the
policy to offer financial protection in terms of benefits, social security and living
costs in the foreign location. Second, the employee will expect a foreign
assignment to offer opportunities for financial advancement through income
and/or savings. Third, the employee will expect issues such as the cost of housing, education of children, and home leave to be addressed in the policy.
If we contrast the objectives of the MNE and the employee, we of course see the
potential for many complexities and possible problems, as some of these
objectives cannot be maximized on both sides. The war stories about problems
in international compensation that we see in HR practitioner magazines is
testimony to these complexities and problems. McNulty et al. also allude to these
problems in their studies of expatriation, particularly in the Asia Pacific region.16
However, if we take away the specialist jargon and allow for the international
context, are the competing objectives of the firm and the employee
fundamentally different from that which exists in a domestic environment? We
think not. We agree with the broad thrust of an influential article by Milkovich
and Bloom17 which argues that firms must rethink the traditional view that local
conditions dominate international compensation strategy. This is again another
applica- tion of the ongoing balancing act between global standardization and
local customization.

7. ) Assess the importance of global events on the success or failure of

international assignments. What steps can a human resource manager take to
minimize the impact of such events? Chapter 9 page 258
Volatile global markets and growing security issues, organizations should
continue to leverage global expansion strategies to remain competitive and to
grow. Global events impact cost of expatriate packages. Factors including
currency fluctuations,offshoring, cost inflation for goods and services, and
instability of accommodation prices, contribute to the cost of expatriate
packages for employees on international assignments.
Roles for HRM:
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Consultation with unions/employee representatives.

Manpower planning

Contributing to the internal communication strategy.

Identifying appropriate training needs

Designing new jobs which stem from offshoring operations.

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Highlighting potential risks, such as the implications of employment
regulation both in the home country and in foreign locations.