Lecture-2

Difference between Domestic HRM

and IHRM
 Difference between Domestic
and International HRM
Domestic HRM is concerned with managing
employees belonging to one nation. IHRM is
very complicated as it is affected heavily by
external factors such as
cultural differences and institutional factors.
• Domestic HRM is concerned with
managing limited number of HRM activities
at national level.
 International HRM
IHRM requires a number of additional
activities, which are unnecessary in a
domestic context. Typical examples are
the consideration of international
taxation, relocation and orientation,
administrative services, host-government
relations and language translation
services.
 Inter-relationships between approaches to the field

IHRM Chapter 1 4
Differences between domestic HRM and IHRM

IHRM complexity can be attributed to five factors:

1. Human resource planning
2. Staffing (recruitment, selection, placement)
3. Performance management
4. Training and development
5. Compensation (remuneration) and benefits

IHRM Chapter 1 5
 Variables in IHRM
Taxation- the tax rate in developed countries such as
UK and Australia is up to 25% depending on
employee’s income level, which is very high.
Conversely, in some developing and less developed
countries, the tax rate is much lower
Diversity Management and Training- IHRM requires
attention to resolve potential problems in the
international relocation and orientation activities,
such as arranging for pre-departure training
providing housing, recreation, medical care and
immigration information, and finalizing
compensation details.
 IHRM Models
Matching Model
Developed by Fomburn et al., 1984
Highlights the resource aspect of HRM
Emphasize on efficient utilization of
human resources to meet organizational
objectives. It also emphasises on ‘right fit’
between organizational strategies,
organizational structure and HRM systems
 Harvard Model
Developed by Beer et al., 1984 It stresses the
‘human’, soft, aspect of HRM and is more
concerned with the employer–employee
relationship. It focuses on the training and
development and motivation of the employees. It
also highlights the interests of different
stakeholders in the organisation (such as
shareholders, management, employee groups,
government, community, unions) and how their
interests are related to the objectives of
management
 Contextual Model
Developed by Hendry et al., 1988; Hendry and
Pettigrew, 1992. It is based on the premise that
organisations may follow a number of different
pathways in order to achieve the same results. This is
so mainly because of the existence of a number of
linkages between external environmental context
(socio-economic, technological, political-legal and
competitive) and internal organisational context
(culture, structure, leadership, task technology and
business output). These linkages contribute directly
to forming the content of an organisation’s HRM.
 5-P Model
Developed by Schuler, 1992 It melds five
human resource activities (philosophies,
policies, programmes, practices and
processes) with strategic needs. The
model shows the interrelatedness of
these activities and explains their
significance in achieving the
organisation’s needs
 5-P Model
•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 strategic business needs
• Practices - HR practices motivate behaviors that allow
individuals to assume roles consistent with organization‘s
strategic objectives.
•Processes - Continuum of participation by all employees in
specific activities to facilitate formulation and
implementation of other activities
 European Model
European Model Developed by Brewster, 1993,
1995 It is based on the argument that European
organisations are constrained at both
international (European Union) and national
level by national culture and legislation. They are
also constrained at the organisational level by
patterns of ownership and at the HRM level by
trade union involvement and consultative
arrangements. These constraints need to be
accommodated while forming a model of HRM