Globalization : Globalization : INTERNATIONALIZATION of INTERNATIONALIZATION of

HRM PRACTICESHRM PRACTICES

PPresented by : Group-8 resented by : Group-8

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Indraveer singh 13Kishanpal 16 Manoj dubey 18Nadeem 24

Pal singh 27Pavan kumar 29 R d gupta 38

Introduction / Scope of Introduction / Scope of PresentationPresentation

Stages of GlobalizationStages of Globalization Types of international organizationTypes of international organization Role of HRM and IHRMRole of HRM and IHRM Comparison between Domestic HRM and IHRMComparison between Domestic HRM and IHRM Model of IHRMModel of IHRM IHRM PracticesIHRM Practices Staffing Policy Determinants Staffing Policy Determinants FactorsFactors affecting International HRMaffecting International HRM ConclusionConclusion

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Stages of GlobalizationStages of Globalization Stage 1: Domestic OperationsStage 1: Domestic Operations

Firms offer products or services that are designed to Firms offer products or services that are designed to primarily serve consumers in the domestic market primarily serve consumers in the domestic market (e.g., law firms)(e.g., law firms)

Stage 2: Foreign OperationsStage 2: Foreign Operations Products and services are opened up to markets in Products and services are opened up to markets in

other countries, but production facilities remain in other countries, but production facilities remain in home countryhome country

Stage 3: Subsidiaries or Joint VenturesStage 3: Subsidiaries or Joint Ventures

-- Some operational facilities are physically moved Some operational facilities are physically moved to other countries. to other countries.

- - Corporate headquarters in home country has Corporate headquarters in home country has high control over foreign operations.high control over foreign operations.

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Types of international organizationTypes of international organization

International corporationInternational corporation is a domestic firm that builds on its existing is a domestic firm that builds on its existing

capabilities to penetrate overseas market e.g. capabilities to penetrate overseas market e.g. honda honda

Multinational corporation Multinational corporation has operating units located in foreign countries. has operating units located in foreign countries.

Each subsidiary functions as autonomous unit and Each subsidiary functions as autonomous unit and provides its goods and services for the geographical provides its goods and services for the geographical region surrounding the country of operation of the region surrounding the country of operation of the subsidiary eg Xerox, phillipssubsidiary eg Xerox, phillips

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Types of international organizationTypes of international organization

Global corporation Global corporation

a type of MNC that controls over its a type of MNC that controls over its subsidiaries across the world through subsidiaries across the world through centralised home office . These firm treat centralised home office . These firm treat entire world as one market e.g. matsushitaentire world as one market e.g. matsushita

Transnational corporationTransnational corporation provide autonomy to the independent provide autonomy to the independent

country oprations but bring separate country oprations but bring separate opration together into an integrated whole opration together into an integrated whole through network structure e.g. unileverthrough network structure e.g. unilever

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Role of HRMRole of HRM ascertaining the corporate strategy of the ascertaining the corporate strategy of the

company and assessing the corresponding company and assessing the corresponding human resource needs; determining the human resource needs; determining the recruitment, staffing and organizational strategy; recruitment, staffing and organizational strategy; recruiting, inducting, training and developing recruiting, inducting, training and developing and motivating the personnel; putting in place and motivating the personnel; putting in place the performance appraisal and compensation the performance appraisal and compensation plans and industrial relations strategy and the plans and industrial relations strategy and the effective management of all these.effective management of all these.

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Role of IHRMRole of IHRM The strategic The strategic role of role of HRM is complex enough in a HRM is complex enough in a

purely domestic firm, but it is more complex in an purely domestic firm, but it is more complex in an international business, where staffing, management international business, where staffing, management development, performance evaluation, and development, performance evaluation, and compensation activities are complicated by profound compensation activities are complicated by profound differences between Countries in labour markets, differences between Countries in labour markets, culture, legal systems, economic systems, and the culture, legal systems, economic systems, and the like.”like.”

It is not enough that the people recruited fit the skill It is not enough that the people recruited fit the skill requirement, but it is equally important that they fit in requirement, but it is equally important that they fit in to the organizational culture and the demand of the to the organizational culture and the demand of the diverse environments in which the organization diverse environments in which the organization functionsfunctions

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Comparison between Domestic Comparison between Domestic HRM and IHRMHRM and IHRM

More HR activitiesMore HR activities Need for a broader perspectiveNeed for a broader perspective Involvement in employee personal Involvement in employee personal

liveslives Change of emphasisChange of emphasis Risk exposureRisk exposure External influencesExternal influences

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Model of IHRMModel of IHRM

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Types of employees

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More HR ActivitiesMore HR Activities Human Resource PlanningHuman Resource Planning

Difficulty in implementing HR procedure in host countries.Difficulty in implementing HR procedure in host countries. Difficulty in aligning strategic business planning to HRP and vice-Difficulty in aligning strategic business planning to HRP and vice-

versa.versa. Providing developmental opportunities for international managers.Providing developmental opportunities for international managers.

Employee HiringEmployee Hiring Ability to mix with organisation’s culture.Ability to mix with organisation’s culture. Ethnocentric, polycentric or geocentric approach to staffing.Ethnocentric, polycentric or geocentric approach to staffing. Selection of expatriates.Selection of expatriates. Coping with expatriate failures.Coping with expatriate failures. Managing repatriation process.Managing repatriation process.

Training and DevelopmentTraining and Development Emphasis on cultural trainingEmphasis on cultural training Language trainingLanguage training Training in manners and mannerisms.Training in manners and mannerisms.

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More HR ActivitiesMore HR Activities CompensationCompensation

Devising an appropriate strategy to compensate expatriates.Devising an appropriate strategy to compensate expatriates. Minimising discrepancies in pay between parent, host and third Minimising discrepancies in pay between parent, host and third

country nationals.country nationals. Issues relating to the re-entry of expatriates into the home country.Issues relating to the re-entry of expatriates into the home country.

Performance ManagementPerformance Management Constraints while operating in host countries need to be considered.Constraints while operating in host countries need to be considered. Physical distance, time difference and cost of reporting system add to Physical distance, time difference and cost of reporting system add to

the complexity.the complexity. Identification of raters to evaluate subsidiary performances.Identification of raters to evaluate subsidiary performances.

Industrial RelationsIndustrial Relations Who should handle industrial relations problem in a subsidiary?Who should handle industrial relations problem in a subsidiary? What should be the attitude of parent company towards unions in a What should be the attitude of parent company towards unions in a

subsidiary?subsidiary? What should be union tactics in subsidiaries?What should be union tactics in subsidiaries?

IHRM PRACTICESIHRM PRACTICES

International staffingInternational staffing Pre-departure training for Pre-departure training for

international assignmentsinternational assignments RepartitionRepartition Performance management in Performance management in

international assignmentsinternational assignments Compensation issue in international Compensation issue in international

assignmentsassignments

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International staffingInternational staffing Home country or parent country nationalHome country or parent country national are citizens of the country in which headquarter of are citizens of the country in which headquarter of

the MNC is located. They are not the citizens of the the MNC is located. They are not the citizens of the country in which they are working and where business country in which they are working and where business is located is located

Host country nationalHost country national are those employees who are the citizens of the are those employees who are the citizens of the

country in which the organization foreign subsidiary is country in which the organization foreign subsidiary is located.located.

Third party nationalThird party national are the citizens of the country other than the are the citizens of the country other than the

organization is headquartered and the country hosting organization is headquartered and the country hosting the subsidiarythe subsidiary

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Pre-departure training for Pre-departure training for international assignmentsinternational assignments

Language training Language training Cultural trainingCultural training Managing personal and family lifeManaging personal and family life

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RepatriationRepatriation

Process of bringing back an expatriate Process of bringing back an expatriate home after he has completed his home after he has completed his international assignmentinternational assignment

Difficulties upon Return HomeDifficulties upon Return Home20-40% of 20-40% of repatriatesrepatriates quitquit after returning home. after returning home. Why?Why? Lack of respect for acquired skills/knowledgeLack of respect for acquired skills/knowledge Loss of statusLoss of status Poor planning for return positionPoor planning for return position Reverse culture shockReverse culture shock 15

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The Repatriation Process The Repatriation Process Preparation

PhysicalRelocation

Transition

Re-adjustment

RepatriationProcess

Performance management in Performance management in international assignmentsinternational assignments

Compensation packageCompensation package Task assigned to the expatriateTask assigned to the expatriate Headquarter supportHeadquarter support EnvironmentEnvironment Cultural adjustmentCultural adjustment

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Compensation Compensation IssueIssue The need to vary expatriate compensation, depending on the ‘stage The need to vary expatriate compensation, depending on the ‘stage

of life cycle’ of the expatriate’s family (e.g. young children, children of life cycle’ of the expatriate’s family (e.g. young children, children in college, etc).in college, etc).

Remuneration issues related to re-entry into the parent-country Remuneration issues related to re-entry into the parent-country organisation.organisation.

Discrepancies in pay between parent, host and third-country Discrepancies in pay between parent, host and third-country nationals.nationals.

Remuneration issues to deal adequately with new waves of change Remuneration issues to deal adequately with new waves of change in the internationalbusiness environmentin the internationalbusiness environment

ObjectivesObjectives Attract employees who are qualified and interested in international Attract employees who are qualified and interested in international

assignments assignments Facilitate the movement of expatriates from one subsidiary to Facilitate the movement of expatriates from one subsidiary to

another, from the home country to subsidiaries, and from another, from the home country to subsidiaries, and from subsidiaries back to the home country;subsidiaries back to the home country;

Provide a consistent and reasonable relationship between the pay Provide a consistent and reasonable relationship between the pay levels of employees at the headquarters, domestic affiliates, and levels of employees at the headquarters, domestic affiliates, and foreign subsidiaries; and foreign subsidiaries; and

Be cost-effective by reducing unnecessary expensesBe cost-effective by reducing unnecessary expenses16

Staffing Policy DeterminantsStaffing Policy Determinants The Cultural DimensionThe Cultural Dimension

Subsidiary CharacteristicsSubsidiary Characteristics

Parent Company CharacteristicsParent Company Characteristics

Host Country CharacteristicsHost Country Characteristics

CostsCosts19

Staffing PolicyStaffing Policy

Ethnocentric ApproachEthnocentric Approach

Polycentric ApproachPolycentric Approach

Geocentric ApproachGeocentric Approach

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Ethnocentric ApproachEthnocentric Approach

Key management positions are filled by parent Key management positions are filled by parent country nationalscountry nationals

Best suited for international bussinessBest suited for international bussiness

AdvantagesAdvantages Overcomes lack of qualified managers in host Overcomes lack of qualified managers in host

nationsnations Unified cultureUnified culture Help transfer of competenciesHelp transfer of competencies

DisadvantagesDisadvantages Produces resentment in host countryProduces resentment in host country Can lead to cultural myopiaCan lead to cultural myopia

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Polycentric ApproachPolycentric Approach Host nationals manages subsidiaryHost nationals manages subsidiary Parent company national hold key headquarter Parent company national hold key headquarter

positionspositions Best suited to multi domestic bussinessBest suited to multi domestic bussiness

AdvantagesAdvantages Elevates cultural myopiaElevates cultural myopia Inexpensive to implementInexpensive to implement Help transfer of core competenciesHelp transfer of core competencies

DisadvantagesDisadvantages Limits opportunity to give experience of host Limits opportunity to give experience of host

country nationals outside their own countrycountry nationals outside their own country Can create gap between home and host country Can create gap between home and host country

operationsoperations22

Geocentric ApproachGeocentric Approach

Seeks best people regardless of nationalitySeeks best people regardless of nationality Best suited to global and transnational bussinessBest suited to global and transnational bussiness

AdvantagesAdvantages Enables the firm to make best use of its human Enables the firm to make best use of its human

resourseresourse Equips executives to work in no of culturesEquips executives to work in no of cultures Helps to build strong unifies culture and informal Helps to build strong unifies culture and informal

management networkmanagement network

Disadvantage:Disadvantage: National immigration policies may limit National immigration policies may limit

implementationimplementation Expensive to implement due to training and relocationExpensive to implement due to training and relocation Compensation structure may be a problemCompensation structure may be a problem 23

Factors Factors affecting International affecting International HRMHRM

Differences in Labor Market Differences in Labor Market CharacteristicsCharacteristics

Cultural DifferencesCultural Differences Differences in Regulatory EnvironmentDifferences in Regulatory Environment Altitude Towards EmploymentAltitude Towards Employment Difference in Conditions of EmploymentDifference in Conditions of Employment

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Summary and Summary and ConclusionConclusion

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