IHRM PPT (1)

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INTERNATIONAL HUMAN INTERNATIONAL HUMAN RESOURCERESOURCE

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Human Resource ManagementHuman Resource Management

Human Resource Management (HRM) Human Resource Management (HRM) involves all management decisions involves all management decisions and practices that directly affect the and practices that directly affect the people who work for the organization.people who work for the organization.

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A Definition of Human Resource A Definition of Human Resource ManagementManagement

““HumanHuman” represents the dimension of HRM ” represents the dimension of HRM which relates to the soft aspects such as which relates to the soft aspects such as commitment of employees through commitment of employees through participation and the most important assets participation and the most important assets being the employees. being the employees.

““ResourceResource” represents the hard aspects such ” represents the hard aspects such as the strategy link of HRM and the importance as the strategy link of HRM and the importance of efficient utilization of employees. of efficient utilization of employees.

““ManagementManagement” represents the role of HRM as ” represents the role of HRM as part of management that implies that it’s not part of management that implies that it’s not only an administrative function that carries out only an administrative function that carries out the formulated policies but also a managerial the formulated policies but also a managerial function that contributes to strategy function that contributes to strategy formulation.formulation.

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Why International Human Why International Human Resource Management?Resource Management?

Increasing globalization, firms and Increasing globalization, firms and employees in them moving all over employees in them moving all over the world.the world.

Major problems in international Major problems in international operations because of human operations because of human resource management blundersresource management blunders

Hence need to understand human Hence need to understand human resource management in a global resource management in a global perspectiveperspective

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Why International Human Why International Human Resource Management? Resource Management? (cont’d)(cont’d)

Managing a Multicultural WorkforceManaging a Multicultural Workforce Developing Managerial Talent in a Developing Managerial Talent in a

Global Business EnvironmentGlobal Business Environment

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The General Field of HRThe General Field of HR

Major Functions and ActivitiesMajor Functions and ActivitiesHuman resource planningHuman resource planningStaffingStaffing

RecruitmentRecruitmentSelectionSelectionPlacementPlacement

Performance appraisalPerformance appraisalTraining and developmentTraining and developmentIndustrial relationsIndustrial relations

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International Recruitment International Recruitment and Selectionand Selection

RecruitmentRecruitment – Defined as searching for – Defined as searching for and obtaining potential job candidates and obtaining potential job candidates in sufficient numbers for and quality in sufficient numbers for and quality so that the organization can select the so that the organization can select the most appropriate persons for its job most appropriate persons for its job needs.needs.

SelectionSelection – Defined as the process of – Defined as the process of gathering information for the purposes gathering information for the purposes of evaluating and deciding whom of evaluating and deciding whom should be employed in particular jobs. should be employed in particular jobs.

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Types Of Types Of InternationalInternational Staffing Staffing PolicyPolicy

EthnocentricEthnocentric All key managerial positions are filled by All key managerial positions are filled by parent-country nationals.parent-country nationals.Consistent with international strategyConsistent with international strategyDisadvantage: cultural myopiaDisadvantage: cultural myopiaThe cultural differences & environmental The cultural differences & environmental differences will be huge and expatriates may differences will be huge and expatriates may not be able to cope up with. Thus resulting in not be able to cope up with. Thus resulting in costly management mistakes.costly management mistakes.e.g., Procter & Gamble – Associate with higher e.g., Procter & Gamble – Associate with higher incidence of IHRM problemsincidence of IHRM problems

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Types Of International Types Of International Staffing PolicyStaffing Policy

PolycentricPolycentric Key positions are filled with Host country nationals.Key positions are filled with Host country nationals. Host country nationals manage subsidiariesHost country nationals manage subsidiariesConsistent with multi domestic strategyConsistent with multi domestic strategyDisadvantage: create a gap between home and host Disadvantage: create a gap between home and host operationsoperations

Geocentric or globalGeocentric or global Best managers are recruited from within or outside the Best managers are recruited from within or outside the company regardless of nationality, TCN’s – used by company regardless of nationality, TCN’s – used by European MNC’s, some U.S. companies (Philips, Heinz, European MNC’s, some U.S. companies (Philips, Heinz, Unilever, IBM)Unilever, IBM) Help build an informal management networkHelp build an informal management network Disadvantage: may be subject to the immigration policiesDisadvantage: may be subject to the immigration policies

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Types Of International Types Of International Staffing PolicyStaffing Policy

RegiocentricRegiocentric Recruiting on a regional basis.Recruiting on a regional basis.

For example, a U.S. based firm could create three regions;For example, a U.S. based firm could create three regions;

Europe, the Americas, and Asia-pacific.Europe, the Americas, and Asia-pacific.

European staff would be transferred throughout the European staff would be transferred throughout the EuropeanEuropean

region (say a Briton to Germany, a French national to region (say a Briton to Germany, a French national to Belgium,Belgium,

and a German to Spain). and a German to Spain).

E.g.: Ford Motor Company.E.g.: Ford Motor Company.

Disadvantage: produce federalism at a regional rather than Disadvantage: produce federalism at a regional rather than a country basis and constrain the organization from taking a a country basis and constrain the organization from taking a global stance.global stance.

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Selecting Staff for Selecting Staff for International AssignmentsInternational Assignments

Selecting staff for international assignments is a Selecting staff for international assignments is a complex undertaking for several reasons, complex undertaking for several reasons, including:including:

Identifying a suitable person for the assignmentIdentifying a suitable person for the assignment Predicting his or her performance in a new, culturally Predicting his or her performance in a new, culturally

potentially very different environmentpotentially very different environment Dealing with personal and family-related issues and Dealing with personal and family-related issues and

problems problems Devising an appropriate compensation packageDevising an appropriate compensation package Complying with host country regulationsComplying with host country regulations

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Criteria for Selecting Staff Criteria for Selecting Staff for International for International

AssignmentsAssignments

SELECTION DECISION

Technical Ability

Cross-Cultural Suitability

Family Requirements

Country-CulturalRequirements

Language

Organization-SpecificRequirements

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The Staff Selection The Staff Selection CriteriaCriteria

(Technical Ability)(Technical Ability) Technical and managerial competencies Technical and managerial competencies

of the person to perform the required of the person to perform the required

taskstasks

Research studies indicate that technical Research studies indicate that technical

ability are the most important selection ability are the most important selection

criteria for organizations criteria for organizations

Usually easy to evaluate on the basis of Usually easy to evaluate on the basis of

past performancepast performance

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(Cross-Cultural Suitability)(Cross-Cultural Suitability) Certain individual traits and characteristics can Certain individual traits and characteristics can

have an impact on the success or failure of an have an impact on the success or failure of an

international assignment – cultural empathy, international assignment – cultural empathy,

adaptability, diplomacy, language ability, positive adaptability, diplomacy, language ability, positive

attitude, emotional stability, and maturityattitude, emotional stability, and maturity

Ability to implement technical and managerial Ability to implement technical and managerial

skills and feel reasonably comfortable in a foreign skills and feel reasonably comfortable in a foreign

environment environment

Sometimes difficult to determineSometimes difficult to determine

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(Family Requirements)(Family Requirements) Spouse may not adjust to a foreign Spouse may not adjust to a foreign

environmentenvironment

Adjustment level of spouse depends on several Adjustment level of spouse depends on several

factors, such as the adjustment of the factors, such as the adjustment of the

expatriate and the spouse’s own opinion of the expatriate and the spouse’s own opinion of the

international assignmentinternational assignment

A higher level of organizational support in the A higher level of organizational support in the

early stages of expatriation usually correlates early stages of expatriation usually correlates

with a higher level of adjustment by the spousewith a higher level of adjustment by the spouse

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(Country-Cultural (Country-Cultural Requirements)Requirements) ““Hardship Postings” (Remoteness of job Hardship Postings” (Remoteness of job

location, social upheavals, safety risks, very location, social upheavals, safety risks, very

low standard of living and lack of recreational low standard of living and lack of recreational

opportunities etc.)opportunities etc.)

Pressure of living in repressive cultures and Pressure of living in repressive cultures and

countries (e.g. China, Saudi Arabia and other countries (e.g. China, Saudi Arabia and other

totalitarian Islamic states in the Middle East)totalitarian Islamic states in the Middle East)

Denial of work permits to female expatriates Denial of work permits to female expatriates

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(Organization-Specific (Organization-Specific Requirements)Requirements)

Situational Factors influence staff selection. Situational Factors influence staff selection. Examples:Examples:

Organization’s staffing approach may require Organization’s staffing approach may require sending more expatriates to work in certain sending more expatriates to work in certain regions and locations than otherwiseregions and locations than otherwise

Partner organizations may be involved in the Partner organizations may be involved in the selection of expatriate staff, for example, on selection of expatriate staff, for example, on international joint venturesinternational joint ventures

Certain specific skills, for example, training, may Certain specific skills, for example, training, may be used as a selection criteriabe used as a selection criteria

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(Language)(Language) Important situational factor. Knowledge of Important situational factor. Knowledge of

the host country’s language is considered the host country’s language is considered

critical for many senior-level positions along critical for many senior-level positions along

with the ability to communicate effectivelywith the ability to communicate effectively

Knowledge of the host country’s language Knowledge of the host country’s language

helps expatriates and their families feel helps expatriates and their families feel

more comfortable in the new environmentmore comfortable in the new environment

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(Other Considerations 1)(Other Considerations 1)TimeTime – Unexpected international vacancies may – Unexpected international vacancies may

arise for which positions have to be quickly arise for which positions have to be quickly

filled by expatriates and which may preclude filled by expatriates and which may preclude

the use of screening teststhe use of screening tests

Family Family - A potential expatriate may refuse the - A potential expatriate may refuse the

international assignment due to family international assignment due to family

considerations (children’s welfare and considerations (children’s welfare and

education, parental care, single parents)education, parental care, single parents)

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(Other Considerations 2)(Other Considerations 2)Dual-Career CouplesDual-Career Couples – Research studies – Research studies undertaken reveal that many potential expatriates undertaken reveal that many potential expatriates are reluctant or unwilling to take on international are reluctant or unwilling to take on international assignments because of the career implications for assignments because of the career implications for their spouses, e.g. loss of jobs and career their spouses, e.g. loss of jobs and career opportunities, difficulty in finding new employment opportunities, difficulty in finding new employment in the expatriate’s host country in the expatriate’s host country

Some companies are now offering assistance Some companies are now offering assistance programs for the benefit of their expatriates’ programs for the benefit of their expatriates’ spouses (employment hunting, networking, intra-spouses (employment hunting, networking, intra-company employment, commuter marriages and company employment, commuter marriages and on-assignment career support) on-assignment career support)

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(Other Considerations 3)(Other Considerations 3)Female Managers – Studies reveal that female expatriates Female Managers – Studies reveal that female expatriates make up a very small proportion (< 10% percent) of the make up a very small proportion (< 10% percent) of the total expatriate population. Possible reasons are:total expatriate population. Possible reasons are:

Females are less desirous than males of international Females are less desirous than males of international assignmentsassignments

Females are less likely to be offered international Females are less likely to be offered international assignmentsassignments

There are a comparatively smaller number of females with There are a comparatively smaller number of females with the requisite skills to be sent on international assignmentsthe requisite skills to be sent on international assignments

Many repressive cultures discourage the sending of Many repressive cultures discourage the sending of female expatriates, and female expatriates, and

In many repressive cultures males do not like reporting to In many repressive cultures males do not like reporting to females females

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What does IHRM add into the What does IHRM add into the Traditional Framework of Traditional Framework of

HRM?HRM?Types of employeesTypes of employeesWithin and cross-cultural workforce diversityWithin and cross-cultural workforce diversityCoordinationCoordinationCommunicationCommunication

Human resource activitiesHuman resource activitiesProcurementProcurementAllocationAllocationUtilization of human resourcesUtilization of human resources

Nation/country categories where firms Nation/country categories where firms expand and operateexpand and operateHost countryHost countryParent countryParent countryThird countryThird country

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Some Terms DefinedSome Terms Defined

Host Country National (HCN)Host Country National (HCN): Belongs to : Belongs to the Country where the subsidiary is the Country where the subsidiary is located located

Parent Country National (PCN)Parent Country National (PCN): Belongs : Belongs to the Country where the firm has its to the Country where the firm has its headquartersheadquarters

Third Country Nationals (TCN)Third Country Nationals (TCN): Belongs : Belongs to any other country and is employed by to any other country and is employed by the firmthe firm

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What is an expatriate?What is an expatriate?

An employee who is working and An employee who is working and temporarily residing in a foreign temporarily residing in a foreign countrycountry• Some firms prefer to use the term Some firms prefer to use the term

““international assigneesinternational assignees””• Expatriates are Expatriates are PCNPCNs from the parent s from the parent

country operations, country operations, TCNTCNs transferred to s transferred to either HQ or another subsidiary, and either HQ or another subsidiary, and HCNHCNs transferred into the parent s transferred into the parent countrycountry

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The Expatriate ProblemThe Expatriate ProblemHigh Expatriate Failure RatesHigh Expatriate Failure RatesAverage cost per failure to the parent Average cost per failure to the parent

firm can be as high as three times the firm can be as high as three times the expatriate’s annual domestic salary plus expatriate’s annual domestic salary plus the cost of relocationthe cost of relocation

Between 16% & 40% of all American Between 16% & 40% of all American employees sent abroad to developed employees sent abroad to developed nations, and almost 70% sent to less nations, and almost 70% sent to less developed nations return home earlydeveloped nations return home early

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The Reasons for The Reasons for “Expatriate Failure”“Expatriate Failure”

Inability to Cope With Larger International

Responsibility

Manager’s Personal orEmotional Maturity

Manager’s Inabilityto Adjust

Other Family Reasons

Spouse’s Inability to Adjust

Difficulties with thenew environment

Personal or emotionalproblems

Lack of technical competence

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Expatriate FailureExpatriate Failure

The selection process in international firms is The selection process in international firms is particularly important because of the high cost of particularly important because of the high cost of expatriate failure. expatriate failure. Expatriate failureExpatriate failure is the early return of an is the early return of an expatriate manager to his or her country because expatriate manager to his or her country because of an inability to perform in the overseas of an inability to perform in the overseas assignment. assignment. The cost of expatriate failure ranges between The cost of expatriate failure ranges between $40,000-$250,000.$40,000-$250,000.

Expatriate failure rates may be as high as 20-50 Expatriate failure rates may be as high as 20-50 percent in many U.S. companies, higher than for percent in many U.S. companies, higher than for either European or Japanese companieseither European or Japanese companies. .

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PerformancePerformance Appraisal Appraisal

A communication tool to measure each A communication tool to measure each individual's contributionindividual's contribution

To evaluate talent and achievement with To evaluate talent and achievement with sensible consistency and accuracysensible consistency and accuracy

To help distinguish barriers to top performance To help distinguish barriers to top performance

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Why Appraise Why Appraise PerformancePerformance

Periodic evaluation helps mangers to have a better Periodic evaluation helps mangers to have a better understanding of each employee's skills with the goal to understanding of each employee's skills with the goal to facilitate, train and develop abilities and power to their facilitate, train and develop abilities and power to their employeesemployees

A chase to assess job development, encourage interest A chase to assess job development, encourage interest and enhance job performance by pointing out the and enhance job performance by pointing out the development and recognizing productive workdevelopment and recognizing productive work

A feedback system that mightA feedback system that might otherwise be overlookedotherwise be overlooked

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An iterative process of goal-setting, An iterative process of goal-setting,

communication, observation and evaluation to communication, observation and evaluation to

support, retain and develop exceptional support, retain and develop exceptional

employees for organizational success.employees for organizational success.

Performance Performance ManagementManagement

CommunicateCommunicate

ObserveObserveEvaluateEvaluate

Set GoalsSet Goals

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Rating ScaleRating Scale

4 - Excellent 4 - Excellent (Exceeds Standards)(Exceeds Standards)

3 - Good 3 - Good (Fully Meets Standards)(Fully Meets Standards)

2 – Acceptable 2 – Acceptable (Usually Meets Standards)(Usually Meets Standards)

1 – Unsatisfactory 1 – Unsatisfactory (Fails to Meet (Fails to Meet Standards)Standards)

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Training and DevelopmentTraining and DevelopmentTraining = Altering behaviorTraining = Altering behaviorDevelopment = Increasing Development = Increasing

knowledgeknowledgeLearning = Permanent change in Learning = Permanent change in

behaviorbehaviorTypes of TrainingTypes of Training

Lectures

Programmed

instructions

Audio-Visual

Computer

assisted

Reasons for TrainingReasons for Training

TurnoverTurnoverChange in programChange in programNeeds of organization or personnelNeeds of organization or personnelCost effectivenessCost effectivenessEmployee promotion and Employee promotion and

advancementadvancement

Results or OutcomesResults or Outcomes

Increased quality and quantity of Increased quality and quantity of work performancework performance

Decrease accidentsDecrease accidents Increase knowledge, skills attitudesIncrease knowledge, skills attitudesDecrease costs of managementDecrease costs of managementDecrease absenteeism and turnover Decrease absenteeism and turnover

ratesrates Increase job satisfaction - productionIncrease job satisfaction - production

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INDUSTRIAL RELATIONS INDUSTRIAL RELATIONS

1. IR is a relationship between 1. IR is a relationship between management and employees or management and employees or among employees and their among employees and their organizations, that characteristics and organizations, that characteristics and grow out of employment.grow out of employment.

2. IR may be defined as the complex of 2. IR may be defined as the complex of inter- relations among workers, inter- relations among workers, managers and government. managers and government.

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Objective of IRObjective of IR

1.1. To promote and develop labor To promote and develop labor management relation.management relation.

2.2. To regulate the production by minimizing To regulate the production by minimizing industrial conflictsindustrial conflicts

3.3. To provide opportunity to workers to To provide opportunity to workers to involve in decision making process with involve in decision making process with management.management.

4.4. To encourage and develop trade unions in To encourage and develop trade unions in order to improve the workers' strength.order to improve the workers' strength.

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Differences between Domestic HRM Differences between Domestic HRM and IHRMand IHRM

More HR activitiesMore HR activities: taxation, culture : taxation, culture orientation, administrative servicesorientation, administrative services

The need for a broader perspectiveThe need for a broader perspective: cater : cater to multiple needsto multiple needs

More involvement in employees’ personal More involvement in employees’ personal liveslives: adjustment, spouses, children: adjustment, spouses, children

Risk exposureRisk exposure: expatriate failure, terrorism: expatriate failure, terrorism Broader external influencesBroader external influences: government : government

regulations, ways of conductregulations, ways of conduct

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Choosing an Approach to Choosing an Approach to IHRMIHRM

Political and Legal ConcernsPolitical and Legal ConcernsLevel of Development in Foreign Level of Development in Foreign

LocationsLocationsTechnology and the Nature of the Technology and the Nature of the

ProductProductOrganizational Life CycleOrganizational Life CycleCultural DifferencesCultural Differences

IHRM PPT (1)

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Transcript of IHRM PPT (1)