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MODULE 1. INTERNATIONAL

H.R.MDifference between Domestic HRM and

IHRM, Managing International HRactivities- HR planning, Recruitment &

Selection, Training & Development,Performance management,

Remuneration, Repatriation & employeerelations. Socio-Political Economic

SystemU.S, U.K, Japan and Indiaacomparative analysis.

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Why study of IHRM is essential?

Impact of internationalisation of business

- Boundary-less business operations

- Increasing international competition on

quality, price, delivery schedule, material

availability etc

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Typical HRM activities are:

- HR planning

- Staffing (recuitment, selection, placement)

- Performance management

- Training and development- Compensation and benefits

- Industrial Relations

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Morgan model of IHRM presents three

Dimensions of IHRM:

1. Procurement, allocation and utilisation of HR(covers all typical HR activities)

2. National or country categories involved inIHRM activities.

-Host country-Home country

-Other countries

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3. Category of employees of an international firm

- Host Country Nationals (HCNs)

- Parent Country Nationals (PCNs)

- Third Country Nationals (TCNs)

Example :-US multinational IBM employs

Australian citizen in its Australian operations

(HCNs), often sends US citizens to Asia-pacific

countries on assignments (PCNs) and may send

some of its Singaporean employee on anassignment to its Japanese operations (TCNs)

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Procure Allocate

Utilize

Host

Home

OtherHCNs

PCNs

TCNs

Types of employees

countries

HR Activities

Model of IHRM

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Morgan defines IHRM as the interplay among the

three dimensionsHR activities, type of

employees and countries of operation.Broadly functions remain the same but national

boundaries changes.

Domestic HRM is also now taking IHRM issues like

multicultural workforce issues, workforce

diversity etc. but the context changes when

dealing in international context.

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What is an Expatr iate?

If an employee who is working and

temporarily residing in a foreign country.Also called international assignees.

What is inpatriate?

Transfer of subsidiary employee to parentcountry. Or when HCN is transferred toparent country operation

What is transpatr iate?Employees who are moved between

subsidiaries

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Parent country

HQ/operations

Subsidiary operations

Counrty A

Subsidiary operationsCounrty B

HCNs

PCNs

TCNs

PCNs

HCNs

NationalBorder

NationalBorder

International Assignments creates Expatriates

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Difference between domestic and

I-HRMKey variable that differentiates domestic and

IHRM

complexity of operating in different

countries

employing different national categories of

workers

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Complexity of IHRM according to

Dowling1. More HR activities

2. The need for a broader prospective

3. More involvement in employees personal

life

4. Changes in emphasis as the workforce mix of

expatriates and locals varies5. Risk exposure

6. Broader external influences

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1.More HR activities

(not needed in domestic)

-I nternational taxation:tax equalization to bedesigned, accounting firm for international

taxation advice-I nternational relocation and orientation:pre-

departure training, immigration and travel,information regarding housing etc,

compensation details like salary overseas,allowances, taxation treatment, returning ofexpatriates etc.

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-Admn. Servicesfor the expatriates: in hostcountry, policy/practice may conflict with

local condition. Host country requires AIDStest for work permit for employee whoseparent firm headquarter is in USA where

this remains controversial issue- Host govt. relations:

- Policy/practices in host country:

payment in kind also violates US foreigncorrupt Practices Act.

- language translation service:

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2. The need for a broader perspective

- Face problem of designing and

administering program for more than one

national (PCN,HCN,TCN) who may have towork together in a particular location, have

to take a broader view of issues. Complex

equity issues arise when PCN, HCN andTCN work together and its a major

challenge in IHRM to resolve such issues.

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3. More involvement in employees

personal life- Involvement in employees personal life is

necessary to a greater extent for selection trainingand effective mgmt of PCN and TCN employees

- Multinationals provide IHR services for PCN andTCNs to ensure that expatriate employees bankinginvestment, home rental while on assignment,home visit and final repatriations is properly co-ordinated

- Requirement like marriage certificate etc to takecare at the time of recruitment

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4. Changes in emphasis as the workforce

mix of expatriates and locals varies- The need for PCNs and TCNs declines as

more trained locals become available

- Resources for expatriate taxation, relocationand orientation are transferred to local staffselection, training and managementdevelopment

- The responsibility of local HR activitiesbroadens

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5. Risk exposureThe potential high cost problems are:

- Expatriate failure

- Under performance while on internationalassignment

- The direct cost per failure to the parent firm may

be even three times the domestic salary plusrelocation expenses. The indirect cost are:

- loss of foreign market share

- damage to key host country relationship

- terrorism and political risk

- devise emergency evacuation procedure

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6. Broader external influences

Major external factors influencing IHRM:

Type of government

The state of the economy

Accepted practices of doing business in host

countries (host government dictating hiring

procedures)

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Variable that moderates differences

between Domestic and Intl HRMThe cultural

environment

The indust(s)

within which the

MNC is

primarily invld

Comlexity invld in

oprtng in diff

count and emploing

diff categ of employees

Attitude of

Senior mgmt

Extent of reliance

of MNC on its

Home Country

or domestic mkt

Domestic and Intl

Activities of HRM func

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Cultural environment

Culture is acquired thru socialisation processwhich begins at birth

Behavioral attitude are transmitted culturally

During visit abroad, cultural differences in

language, food, dress, hygiene and attitude to timeis confronted. This ac prove difficult whenrequired to live

Cultural shock is a phenomena experienced by

people who move across cultures. Peopleexperience shock reaction to new culturalexperience that cause psychological disorientation

Cultural shock can lead to negative feeling abouthost country and its people

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Another issue in x-culture is Emic-Etic

distinction

Emic- is culture specific aspects of conceptsor behaviour

Etic- is culture common aspects of concepts

or behaviour