Introduction To International HRM

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1 AN INTRODUCTION TO INTERNATIONAL HRM

Transcript of Introduction To International HRM

Page 1: Introduction To International HRM

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AN INTRODUCTION TO

INTERNATIONAL HRM

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Myths About Globalisation

• Myth #1:

– Global = International

• Myth #2:

– Global strategy means doing same thing everywhere

• Myth #3:

– Globalizing = stateless corporation, no national/community ties

• Myth #4:

– Globalisation requires abandoning country images and values

• Myth #5:

– Globalizing means tackling on acquisitions or alliances in other countries,

without much integration/change

• Myth #6:

– A strategy must involves sales/operations in another country

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ORGANIZATIONSTYPES OF

INTERNATIONAL

MULTINATIONA

LTRANSNATIONAL

GLOBAL

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• International Organization –

– Transports its business outside home country; each of its operations is a replication of the

company's domestic experience; structured geographically; and involves subsidiary general

managers

– Companies offering multiple products often find it challenging to remain organized e.g. need

to have a common information systems for accounting, financial and management controls,

and marketing.

– Most evolve to become multinational companies

• Multinational Organization–– grows and defines its business on a worldwide basis, but continues to allocate its resources among

national or regional areas to maximize the total.

• Global Organization –– Treat the entire world as though it were one large country; may be the entire company or one or more of

its product lines; may operate with a mixture of two or more organizational structure simultaneously.

• Transnational organization –– Use specialized facilities to permit local responsiveness; more complex coordination mechanism to

provide global integration

Types Of Organizations

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MultinationalInternational

TransnationalGlobalGlobal

Efficiency

HighLow

High

Local Responsiveness

Firm Type And Responsiveness

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Important Lessons for Global Firms

• The need to manage change

• The need to respect local cultures

• The need to understand a corporation’s culture

• The need to be flexible

• The need to learn.

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International HRM

• International human resource management is concerned with the

human resource problems of multi-national firms in foreign

subsidiaries with the unfolding of HR issues that are associated

with the various stages of the internationalization process

- Boxall (1995)

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International HRM

• International HRM (IHRM) is the process of:

– Procuring,

– Allocating, and

– Effectively utilizing human resources

– In a multinational corporation, while

– Balancing the integration and differentiation of HR activities in foreign locations

• Objectives

– To reduce the risk of international human resource

– To avoid cultural risks

– To avoid regional disparities

– To manage diversified human capital.

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P. Morgans Model of IHRM

• Morgan defines IHRM as the interplay among 3 dimensions:

– Human resource activities

– Types of employees

– Countries of operation

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Who 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 HR: more complexity in activities and more

involvement in employees' lives.

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International Assignments Create Expatriates

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Differences between D-HRM and I-HRM

More HR activities: taxation, culture orientation, administrative services

The need for a broader perspective: cater to multiple needs

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

Changes in emphasis as the workforce mix of expatriates and locals varies: fairness

Risk exposure: expatriate failure, terrorism

Broader external influences: government regulations, ways of conduct

Complexity involved in operating in different countries, varied nationalities of employees

The different Cultural Environment

The industry or industries with which the MNC is involved

Attitudes of Senior Management

Extent of reliance of MNC on home country domestic market.

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Variables Involved

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Main Challenges In IHRM

• High failure rates of expatriation and repatriation

• Deployment – getting the right mix of skills in the organization regardless ofgeographical location

• Knowledge and innovation dissemination – managing critical knowledge andspeed of information flow

• Talent identification and development – identify capable people who are ableto function effectively

• Barriers to women in IHRM

• International ethics

• Language (e.g. spoken, written, body)

• Different labor laws, Different political climate

• Different stage(s) of technological advancement

• Different values and attitudes e.g. time, achievement, risk taking

• Roles of religion e.g. sacred objects, prayer, taboos, holidays, etc

• Educational level attained

• Social organizations e.g. social institutions, authority structures, interestgroups, status systems.

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Qualities of Global Managers

• Understand the worldwide business

• Learn about many cultures

• Work with many types of people

• Create cultural synergy

• Adapt to living in many cultures

• Use cross-cultural skills daily

• Treat foreign colleagues as equals

• Use foreign assignments as career development.

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Workforce Diversity

• Diversity is the mixture of people in business, with their variety of

backgrounds, experiences, styles, cultures, skills, gender and competencies

• Differences among people in age, gender, race, ethnicity, religion, sexual

orientation, socioeconomic background, capabilities/disabilities and in the

thought process.

• Management system which incorporates the differences found in a

multicultural workforce in a manner which results in the highest level of

productivity for both the organization and the individual.

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Equal Employment Opportunities (EEO)

• It means eliminating barriers to ensure that all employees are considered for the

employment of their choice and have the chance to perform to their maximum

potential.

• Objectives -

– To promote recognition and acceptance of everyone's right to equality of opportunity

– TO eliminate, as far as possible, discrimination against people by prohibiting discrimination

on the basis of various attributes

– TO eliminate, as far as possible, sexual harassment

– TO provide redress for people who have been discriminated against or sexually harassed.

• EEO practices include:

– fairness at work,

– hiring based on merit and

– promotion based on talent.

– It concerns all aspects of employment including recruitment, pay and other rewards, career

development and work conditions.

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End Of Module

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Annexure

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International Compensation

• Compensation is an integral part of human resource management which helps in

motivating the employees and improving organizational effectiveness.

• Compensation provided to employees can direct in the form of monetary benefits and/or

indirect in the form of non-monetary benefits known as perks, time off, etc.

• Compensation does not include only salary but it is the sum of all rewards and

allowances provided to the employees in return for their services.

• Compensation is extrinsic reward for an employee. Extrinsic rewards include

praise from a superior, salary, employee benefits, career progression etc.

• Almost all the employees accept jobs in MNC’s take-up assignments in various

countries, & take-up the risk, bear inconveniences & discomforts in foreign assignments

mostly based on the compensation package.

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International Compensation

• The most important objective of any pay system is fairness or

equity, generally expressed in three forms:

• Internal equity:

– This ensure that more difficult jobs are paid more.

• External equity:

– Where jobs are fairly compensated in comparison to similar jobs in labour market.

• Individual equity:

– It ensures equal pay is ensured for equal work

• Other Objectives– Attract talent and Retain talent

– Ensure equity

– New and desired behavior

– Control costs

– Comply with legal rules

– Ease of operation

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International Compensation

• The most important objective of any pay system is fairness or

equity, generally expressed in three forms:

• Internal equity:

– This ensure that more difficult jobs are paid more.

• External equity:

– Where jobs are fairly compensated in comparison to similar jobs in labour market.

• Individual equity:

– It ensures equal pay is ensured for equal work

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Major Differences Between D-HRM and I-HRM

• Business activities e.g. taxation, international relocation, expatriateremuneration, performance appraisals, cross-cultural training and repatriation

• Increased complexities e.g. currency fluctuations, foreign HR policies andpractices, different labor laws

• Increased involvement in employee’s personal life e.g. personal taxation,voter registration, housing, children’s education, health, recreation and spouseemployment

• Complex employee mix – cultural, political, religious, ethical, educationaland legal background

• Increased risks e.g. emergency exits for serious illness, personal security,kidnapping and terrorism