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Chapter 1

Introduction of IHRM

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Chapter Objectives We will establish the scope of the textbook:

Define IHRM and key termsIntroduce and review expatriate/international assignment management and evolutionOutline differences between domestic HRM and IHRMIdentify variables that moderate these differences Discover complexity and increasing challenges of current IHRM practices and modelsDiscuss trends and emerging challenges in the global work environment in which IHRM functions and activities are conducted

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Three Approaches to IHRM

Cross-cultural management Examine human behavior within organizations

from an international perspective Comparative HRM and Industrial Relations

Seeks to describe, compare and analyze HRM systems and IR in different countries

HRM in multinational firms Explore how HRM is practiced in multinational

firms

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Interrelationships between Approaches to the Field

Figure1-1

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The General Field of HR

Major Functions and Activities Human resource planning Staffing

Recruitment Selection Placement

Performance management Training & development Compensation & benefits Industrial relations

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What does IHRM add into the Traditional Framework of HRM? Types of employees

Within and cross-cultural workforce diversity Coordination Communication

Human resource activities Procurement Allocation Utilization of human resources

Nation/country categories where firms expand and operate Host country Parent country Third country

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The Interplay of Three Dimensions (Morgan’s Model of IHRM)

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What is an expatriate?

An employee who is working and temporarily residing in a foreign country Some firms prefer to use the term “international

assignees” Expatriates are PCNs from the parent country

operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

Global flow of human resources

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International Assignments Create Expatriates

Figure1-2

The Expansion Scope of IHRM

The field of IHRM covers all issues related to managing the global workforce and firm outcomes

A wide range of HR issues facing MNEs in different parts of their organizations

This definition includes comparative analyses of HRM in different countries (Stahl, Björkman & Morris, 2012).

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Added Complexity between Domestic HRM and IHRM More HR activities The need for a broader perspective More involvement in employees’ personal

lives Changes in emphasis as the workforce mix of

expatriates and locals varies Risk exposure Broader external influences

Examples of IHR Activities

International taxation International relocation & orientation Administrative services for expatriates Host-government relations Language translation services

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Expatriation and Relocation

Arranging for pre-departure training Providing immigration & travel details Providing housing, shopping, medical care,

recreation & schooling information Finalizing compensation details such as:

Delivery of salary overseasDetermination of overseas allowancesTaxation treatment

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Variables that Moderate Differences between Domestic HRM and IHRM

Figure1-3

Culture Matters

Culture shock Emic-etic distinction Convergence hypothesis

Research tends to focus on macro level variables Divergence hypothesis

Research tends to focus on micro level variables The international HR manager must be aware

of cultural differences.

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The MNE Industry Type Continuum

An MNE performs somewhere in this range:

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Multi-domestic Industries Global Industries

Examples:Retailing, distribution, insurance

International strategy:Collapses to a series of domestic strategies

Airlines, semiconductors, copiers

Must integrate activities on a worldwide basis

The world’s top 10 non-financial TNC ranked by TNI 2008a

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What does senior management think? Some of the changes required to truly

internationalize HR Have more to do with a global mindset

than with behaviors.

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A Framework of Strategic HRM in MNEs

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Figure1-4

Asymmetric Events

Reflects heightened concerns about security, risk, and volatility in the global markets

Unmatched in our capabilities & plans Highly leveraged against our particular assets Designed not only to Secure leverage against our assets, but also intended to Work around, offset, and negate what in other contexts

are our strengths Difficult to respond to in a discriminate and

proportionate manner

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The Changing Context of IHRM

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MNEs fail primarily because of A lack of understanding of

in managing human resourcesin foreign environments.

the essential differences

These human considerations are as important as the financial and marketing criteria

Summary Defining IHRM and key terms Contrast between Domestic vs. IHRM Variables that moderate the differences

Complexity and challenges of IHRM The cultural environment Industry type Extent of MNE reliance on its domestic market Senior mgmt. attitudes to international operations

Applying a strategic view of IHRM The changing context

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Vocabulary HRM, IHRM PCN, HCN, TCN MNE Expatriate, inpatriate,

repatriate, international assignee,

Expatriation-Repatriation Equity issues Psychological contract Culture shock

Convergence/divergence hypotheses

Porter’s value chain model

Index of transnationality Global mindset Asymmetric events Environmental dynamics Organizational culture

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IBUS 628 Dr. Yang 24

Discussion Questions

1. What are the main similarities and differences between domestic and international HRM?

2. Define these terms: IHRM, PCN, HCN, and TCN.3. Discuss two HR activities in which a MNE must engage that

would not be required in a domestic environment.4. Why is a greater degree of involvement in employees’

personal lives inevitable in many IHRM activities?5. Discuss at least two of the variables that moderate

differences between domestic and international HR practices.