288 33 Powerpoint Slides Chapter 17 International Human Resource Management

Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementInternational BusinessRakesh Mohan Joshi Professor & Chairperson, IIFT New Delhi 1

Copyright @ Oxford University Press International Business R. M. Joshi

Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementINTERNATIONAL HUMAN RESOURCE MANAGEMENTChapter 17


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementLearning Objectives

To explain the concept of international human resource managementTo elucidate various types of international organizational structures To discuss strategic orientations and practices for international human resource managementTo elaborate upon the management of various human resource activities


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementGlobalization and HRM The rapid globalization of business has resulted in new challenges for cross-country management of human resources which includeHRM has become a crucial determinant to a firms success or failure in international business.Growing significance of trans-national experience for top management jobs in global corporations.Off-shoring of business operations to low-cost locations has augmented the complexity of staffing, performance monitoring, and differential compensations. Human resource practices followed in the West may not be very relevant in other countries due to differences in socio-cultural and regulatory environments.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource Management Human Resource Management (HRM)All those activities undertaken by an organization to utilize its human resources effectively. It includes activities, such as staffing, training and development, expatriate management, performance management, compensation, fulfillment of regulatory obligations, such as labour relations, human welfare and safety etc., and industrial relations.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementInternational HRMComprising diverse requirements of various subsidiaries and developing and sustaining human resource capabilities to achieve organizational goals.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementA Model of International HRM

Its an interplay among three dimensions, i.e., human resource activities, types of employees, and countries of operations.Take Fig. 17.1 from page no. 728


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementDomestic vs. International HRM

Increased functional activitiesFunctional heterogeneityIncreased involvement in employees personal livesEnhanced risksIncreased influence of external environment


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementInternational Organizational StructuresExport DepartmentInternational Division StructureGlobal Organizational StructureGlobal Functional Division StructuresGlobal Product StructureGlobal Geographic StructureGlobal Matrix StructureTrans-national Network Structure


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementStrategic IHRM Orientations and Practices


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementEthnocentric IHRM Orientation

The company tends to follow the parent companys home country HRM practices for its employees across the world. Key managerial and technical personnel are recruited from the parent country nationals (PCNs). Locals are employed only for supporting or lower level jobs with limited opportunities to grow.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementPolycentric IHRM Orientation

Different HR strategies are adopted for different countries depending upon the need. Host country nationals (HCNs) are often employed in foreign subsidiaries whereas the headquarters are generally managed by the PCNs. Host country nationals have higher opportunities for career advancement. Besides, performance evaluation measures and compensation also vary considerably from subsidiary to subsidiary.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementRegiocentric IHRM Orientation

Most HR strategies are adopted regionally. Depending upon the nature of business and marketing strategy, employees are transferred within a region rather than across the region.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementGeocentric IHRM Orientation

The HR policies and practices of the firm are globally integrated leading to development of a real global corporation. The best talented personnel are posted throughout the MNE irrespective of their nationalities.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementManaging International Human Resource Activities


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementStaffing

The process of determining the organizations current and future human resource requirements to meet the organizational goals and taking appropriate steps so as to fulfill those requirements. The process involves identifying the human resource requirement of an organization, and recruitment, selection, and placement of human resources


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementManpower Availability

Availability of desired manpower affects a firms decision to hire locals or expatriates. MNEs often hire locals for lower level jobs except for some Middle East countries which import people even for labour and other low-paid jobs. However, for most skilled and professional assignments, quality of educational system, availability of scientists and engineers, and quality of management schools plays an important role in a firms decisions to hire locals or expatriates


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementForms of International Assignments Filling up job positionsManagement developmentOrganizational development


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementTypes of International Assignments Short-term (upto three months): Assignments related to small project work, machinery or plant repairing, or an interim arrangement till a suitable permanent arrangement is made Extended (Upto one year):Involving similar activities as for short-term assignments for a relatively longer durationLong-term (one to five years):Also referred to as traditional expatriate assignment, involve a well-defined role in foreign operations. Assignments, such as production or marketing manager or a managing director of a subsidiary


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementNon-standard Assignments Commuter assignmentsRotational assignmentsContractual assignmentsVirtual assignments


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementSources of Human Resources for International Staffing Local citizens or HCNs Local employees hired by an MNE of the host country are known as Host Country Nationals (HCNs). A large number of MNEs engage host country citizens for middle and lower level jobs.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementExpatriates

Employees who temporarily reside and work outside their home country are commonly known as expatriates or expats. Expatriates are often used as agents of direct control, socialization, network trade, and gathering market business intelligence.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementParent country nationals (PCNs)Employees who are citizens of the country where the MNE is headquartered. Historically MNEs filled up key positions in their foreign affiliates with PCNs.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementThird country nationals (TCNs)Employees, who are citizens of countries other than the country in which they are assigned to work or the country where the MNE is headquartered.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementOff-shoring Transferring jobs to foreign countries which were previously carried out domestically. The breakthroughs in ICT have made it possible to off-shore various service activities too.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementRecruitment and Selection Recruitment: The process by which an organization attracts the most competent people to apply for its job openings.Selection: The process by which organizations fill their vacant positions. The process of recruitment and selection varies widely among countries


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementCharacteristics of Global Managers Global mindsetStrategic vision and long-term perspectiveAbility to work in diverse cultureWillingness to relocate for international assignmentsAbility to manage change and transition


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementSelection Criteria for International Assignments Technical and managerial competenceAbility to perform under cross-cultural environmentsFamily attitude towards international assignmentsRegulatory framework in host countriesLanguage


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementManaging ExpatriatesPeople working out of their home countries, also known as expatriates, form an integral part of a firms international staffing strategy, especially for higher management positions.

Beside identifying and recruiting the right personnel with desired skills for international assignments, it is also extremely important to provide them with a conducive environment to get their optimum output


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementReasons for Expatriate Failure

Inability to adjust in alien culturesCareer apprehensions on repatriation Relocation anxieties High costs of living and income gapsProblems related to lifestyle adjustments, such as uncomfortable living conditions Family problems, such as spouse dissatisfaction, childrens education, and safety concernsHealth and medical concernsAdaptation problems to different management styles


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementExpatriate Adjustment ProcessThe series of phases expatriates undergo while adjusting to a foreign culture that include:

Initial euphoria Cultural shock Adjustment Re-entry


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementRepatriationThe process of returning home by an expatriate after completion of foreign assignment that include: PreparationPhysical relocationTransitionRe-adjustment


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementTrainingTraining: The process by which employees acquire skills, knowledge, and abilities to perform both their current and future assignments in the organization. Training aims at altering behaviour, attitude, knowledge, and skills of personnel so as to increase the performance of employees.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementPre-departure Training for Overseas AssignmentsCultural sensitization programmesPreliminary visitLanguage training Practical training


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementPerformance Management The process that enables a firm to evaluate the performance of its personnel against pre-defined parameters for their consistent improvements so as to achieve organizational goals. The system used to formally assess and measure employees work performance is termed as performance appraisal.


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementCompensationThe financial remuneration that employees receive in exchange of their services rendered to the organization. It includes wages, salaries, pay rise, and other monetary issues. A good compensation system should be designed within the regulatory framework of the country of operation of an MNE and should be able to attract and retain the best available talent


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementKey Components of International Compensation Systems Base salary: Foreign service premium: Allowances:Hardship allowance Cost of living allowance (COLA) Housing allowance Home leave allowances Education allowances Relocation allowances Assistance for tax equalization


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementStrategic Approaches to International Compensation

Home-country-based Host-country-basedHybrid of the above two


Copyright @ Oxford University Press International Business R. M. JoshiChapter 17: International Human Resource ManagementRegulatory Framework and Industrial RelationsInternational firms are required to adhere to various legislative provisions under the labour laws; compensation and benefit laws; and individual rights laws related to civil rights, immigration, discrimination, and sexual harassment at workplace in countries of their operations which often have considerable differences.


288 33 Powerpoint Slides Chapter 17 International Human Resource Management

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