Course Semester Subject Code Subject Name Unit number Unit Title Lecture Title

: MBA : III : MU0003 : Employee Relations Management :8 :

International Human Resource Management

Lecture Number: 8 : Introduction, Globalization, Domestic and International HRM, Functions of IHRM.

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Session 1

This Unit is divided into three sessions.

Session 1.
Introduction Competencies for the Transnational Manager. International HRM (IHRM) Domestic and International HRM Differences

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INTRODUCTION
Globalization has resulted in the world becoming

increasingly competitive. The race is to provide the best quality at the best rate in the fastest possible time and ensure a complete after sales service. Globalization requires managers to stay abreast of economic, social and political trends around the world, and understand the implications of these trends for their organizations.

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Competencies for the Transnational Manager

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International HRM (IHRM)

IHRM is "the process of procuring, allocating and effectively utilizing

human resources in a multinational corporation".

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International HRM (IHRM)

Host Country Nationals (HCNs): Also called local nationals, they are the employees from the local population. E.g. A worker from any state in India, employed by a Swedish firm operating in India would be

considered a host country national.

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International HRM (IHRM)

Parent or Home Country Nationals (PCNs): Also called expatriates, they are the people sent from the country in which the organization is headquartered. E.g. A Chinese Manager on assignment in India is an expatriate.

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International HRM (IHRM)

Third Country Nationals (TCNs): TCNs are from a country other than where the parent organizations headquarters or

operations are located. If the Swedish firm employs a manager from Pakistan at facilities in India, he would be considered a third country national.

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Impact of Globalization on HRM

Impact on Employment Impact on Human Resource Development Impact of Compensation Impact on Trade Unions Other Effects

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Domestic and International HRM Differences

Cultural Factors Wide-ranging cultural differences from country to country require corresponding differences in

human resource practices among a company's foreign subsidiaries. Human resource professionals must expose,

counsel and assist people in the acclimatization process so as to reduce cultural shock and homesickness.
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Domestic and International HRM Differences

Implications of Inter-country cultural differences for HRM. HR practices such as employee testing and pay plans need to adapt to local cultural norms. While selecting employees for overseas operations, a high degree of sensitivity and empathy for the attitudinal demands of co-workers is necessary. HR staff in a foreign subsidiary should be from host country citizens so that it can be sensitive to the needs and expectations in workplace.

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Domestic and International HRM Differences

Economic Factors:
Differences in economic conditions also require inter-country differences in HR practices. For example, in a country having free enterprise system, the need for efficiency requires HR policies that value productivity, efficient workers and

downsizing. On the other hand, in socialist economies, HR practices tend to shift toward preventing unemployment even at the expense of sacrificing efficiency.

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Domestic and International HRM Differences

Labour Cost Factors: Differences in labour costs existing in different countries also cause differences in HR practices. Higher labour costs require focus on efficiency and HR practices that help in improving labour performance. For example, labour costs are quite higher in USA and UK than in India. Wide gaps in working hours also exist among the countries

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Domestic and International HRM Differences

Industrial Relations Factors Relations between the worker, the union and the employer vary significantly from country to

country, and have a tremendous impact on HR practices. For example, in Germany, co-determination is the rule. Here the employees have the legal right to have their voice in setting company policies. On the other hand, in India, the State plays a major role in employer-employee relations.
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Session 2

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Session 2
Complexities of International HRM International Recruitment International Selection Criteria

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Complexities of International HRM

According to Dowling:
Need for a Broader Perspective More HR Activities Greater Involvement in Personal Lives of Employees

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International Recruitment

Recruitment

and

selection

practices its

in

international firms depend on

staffing

policy, host government's constraints on hiring policies and the firm's ability to attract the right candidates.

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International Recruitment

Ethnocentric Approach Under this policy, all key positions are filled with the home country nationals. This

approach is common for multinational firms in the early stages of internationalization.

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International Recruitment

Polycentric Approach Under this approach, foreign subsidiaries are staffed with host country nationals. Parent company nationals are employed only at the headquarters.

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International Recruitment

Geocentric Approach: Under this approach, the best people are employed in all key positions throughout the organization regardless of their nationality. The global firm can use its human resources most efficiently by transferring the best

person to the open job.

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International Recruitment

Regioncentric Approach Under this approach, operations of the global firm are divided into a few geographical regions (e.g., Europe, America, Asia-Pacific, etc.) and senior managers are transferred within a particular region from one subsidiary to another.

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International Selection Criteria

Special care is needed in the selection of expatriates to avoid 'expatriate failure' which means premature return of an expatriate from a foreign assignment. Generally expatriate selections are made on the basis of technical competence. Adaptability screening must be an integral part of expatriate selection process.
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International Training and Development

According to Daniel Fieldmanemployees need four-tier training.

overseas

Level I training focuses on the impact of cultural differences, and on raising trainees' awareness of such differences and their impact on business outcomes.

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International Training and Development

Four-tier training: Level II focuses on attitudes and aims at getting participants to understand how attitudes (both positive and negative) are formed and how they influence behavior.

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International Training and Development

Four-tier training: Level III training provides factual knowledge about the target country. Level IV provides skill building in areas like language, adjustment and adaptation skills.

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Session 3

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Session 3

International Performance Management. International Compensation Management Repatriation

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International Performance Management

The expatriates may be appraised by objective criteria such as profits and market share, but local events such as political instability may undermine the manager's performance.

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Measures to Improve Performance Appraisal

Stipulate the difficulty level involved in assignments at the expatriate's workplace. Give more weight in evaluation towards the on-site manager's appraisal than towards the home-site manager's appraisal In case the home-site manager appraises the expatriate, background advice from a former expatriate from the same overseas location should be taken. The performance criteria used for a particular job should be modified to fit the overseas position and characteristics of that particular locale. Appraise the expatriate not only in terms of quantitative criteria but also qualitative criteria
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International Compensation Management

International compensation management is an extremely tricky issue for a manager. The cost of living may vary significantly from one country to another. The most common approach to formulating expatriate purchasing technique Approach.
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compensation power known as

is

to

equalize a

across the

countries, Balance

Sheet

Market Rate Approach

Under this approach base salary is linked to the scale in the host country. The

multinational obtains information from local compensation surveys for this purpose.

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Balance Sheet Vs. Market Rate

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Repatriation Repatriation refers to the process of returning back to the parent company and country from the foreign assignment. Repatriation is quite often a bitter or sweet experience for the returning employee.

Repatriates may come back either due to failure in adjusting to the foreign culture or after the successful assignment.
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completion

of

the

overseas

Steps to avoid Reverse Cultural Shock.

Make an agreement guaranteeing that the overseas assignment will be for a specific period and on return, the employee will be given a mutually acceptable job. Assign a sponsor to look after the interests of the employee in his/her absence. Provide career counselling to ensure that the employee's job assignments meet his/her
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needs upon return.

Steps to avoid Reverse Cultural Shock.

Keep in touch with the employee. Offer financial and other support for finding accommodation and children's education. Organize facilitate culture. re-orientation adjustment back programmed into the to

home

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Thank You

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