1. International Human Resource Management

2. 2 Definition The process of procuring, allocating and effectively utilising human resources in an international business is called international human resources management (IHRM). Need for IHRM Managing expatriates Globalization has forced HRM to have international orientation Effectively utilise services of people at both the corporate office and at the foreign plants 3. Model of IHRM 3 HR Activities Procure Utilise Allocate Types of employees Home country nationals Host country nationals Third country nationals Countries Home country Host country Third country 4. More HR activities Need for a broader perspective More involvement in employee personal lives Changes in emphasis as the workforce mix of expatriates and locals vary Risk exposure More external influences Characteristics of IHRM 4 5. More Human Resource Activities 5 Difficulty in implementing HR in host countries Aligning strategic business planning to HRP & vice-versa Developmental opportunities for international managers. Human Resource Planning Ability to mix with organisations culture Ethnocentric, polycentric or geocentric staffing approach Selection of expatriates Coping with expatriate failure Managing repatriation process Employee Hiring Emphasis on cultural training Language training Training in manners & mannerisms Training & Development 6. 6 Devising an appropriate strategy to compensate expatriates Minimising discrepancies in pay between parent, host & third country nationals Issues relating to the re-entry of expatriates into the home country Compensation Constraints while operating in host countries need to be considered Physical distance, time differences & cost of reporting system add to the complexity Identification of raters to evaluate subsidiary performance Performance Management Handling industrial relations problems in a subsidiary Attitude of parent company towards unions in a subsidiary Union tactics in subsidiaries Industrial Relations 7. Need for Broader Perspective 7 Pay issues Different countries, different currencies Gender based pay in Korea, Japan, Indonesia Health insurance for employees & their families Nepotism common in small businesses in Asia Pacific region Overtime working Korean & Japanese firms Promotions based on seniority or merit 8. More Involvement in Employees Personal Lives Changes in Emphasis 8 More involvement for both parent-country & third-country nationals Housing arrangements Health care Remuneration packages Assist children left behind in boarding schools Need for parent-country & third-country nationals decrease as more trained locals become available Resources reallocated to selection, training & management development 9. 9 Physical safety of the employees Terrorism poses a great threat Failure of expatriates to perform well financial losses to the firm Seizure of MNCs assets in a foreign country Risk Exposure Dealing with ministers, political figures, economic & social interest groups Hiring procedures dictated by host country Catch up with local ways of doing business External Influence 10. Reasons for Growing Interest in IHRM 1 0 Globalisation of Business Effective HRM determinant of success in international business Indirect costs of poor performance in international business very costly Movement to network organisations from traditional hierarchical structures Significant role in implementation & control of strategies 11. Basic Steps in IHRM 1 1 HRP Recruitment & Selection Training & Development Performance Management Remuneration Repatriation Employee Relations Multicultural Management 12. HR Planning 1 2 Key Issues in International HRP Identifying top management potential early Identifying CSF for future international managers Providing developmental opportunities Tracking & maintaining commitment to individuals in international career paths Tying strategic business planning to HRP & vice- versa Dealing with multiple business units while focusing on global & regional strategies 13. Recruitment and Selection 1 3 The three categories of employees can be hired: Parent Country National- A parent-country national is a person working in a country other than their country of origin and is also referred to as an expatriate. Some of the benefits that an expatriate can have include the foreign earned income and housing allowance if the home is in the foreign country. 14. 1 4 Host country employees- A host country national is a person who is a citizen of a given country. This individual may be a citizen of the given country by birth or by naturalization. A national of Britain is referred to as a Briton. 15. 1 5 Third country employees- These are the employees who are not from home country/host country but are employed at subsidiary or corporate head quarters. As an example a American MNC which has a subsidiary at India may employ a French person as the CEO to the subsidiary. The Frenchman employed is a third country employee. 16. Advantages & Disadvantages of Using PCNs Advantages Disadvantages 1 6 Familiarity with home office, goals, practices Easy organisational control & coordination International exposure to promising managers PCNs special skills & experiences Difficulty in adapting to foreign country Excessive cost of selecting, training & maintaining expatriates Promotional opportunities limited for HCNs May try to impose inappropriate HQ style Compensation differences for HCNs & PCNs Family adjustment problems 17. Advantages & Disadvantages of Using HCNs Advantages Disadvantages 1 7 Familiarity with the situation in host-country Lower hiring costs Locals motivated due to promotional opportunities Responds well to localisation of subsidiarys operations No language barrier HCNs stay longer in positions Difficulty in exercising effective control over the subsidiarys operations Communication problems with home office personnel No opportunity for home countrys nationals to gain international experience Limited career opportunity outside the subsidiary 18. Advantages & Disadvantages of Using TCNs Advantages Disadvantages 1 8 Salary & benefit requirements lower than that of PCNs May be better informed about host country environment Truly international managers Host country govt. may resent hiring TCNs May not return to their country after assignment Host countrys sensitivity w.r.t nationals of specific countries 19. Expatriate Assignment Life Cycle 1 9 Determining the need for an expatriate Selection Process Pre-assignment training Departure Post-arrival Orientation & Training Crisis & Adjustment Crisis & Failure Repatriation & Adjustment Reassignment Abroad 20. Expatriate Failure 2 0 Premature return of expatriates to their home country Reasons Inability to adjust to host country culture leads to culture shock Personal & emotional problems Difficulties with the environment Inability to cope with larger international responsibilities Other family reasons 21. 2 1 Expatriate Selection Family Reqments Cross- cultural Suitability MNC Reqments Language Country- cultural Reqments Technical Ability 22. Components of Remuneration Package Factors Influencing Compensation 2 2 Base salary Benefits Allowances Incentives Taxes Internal Environment Goal Orientation Capacity to pay Competitive strategy Organisational culture Internal workforce composition External Environment Labour market characteristics Local culture Home & host country govts role Industry type 23. Repatriation 2 3 Preparation Physical Relocation Transition Readjustment The activity of bringing the expat back to the home country Can cause re-entry shock or reverse culture shock Reasons Posting period over Childrens education Not happy with overseas assignment Failure to do a good job 24. 2 4