INTERNATIONAL HUMAN

RESOURCE MANAGEMENT
HRM - A dictionary definition
Administrative activities associated with human
resources planning, recruitment, selection,
orientation, training, appraisal, motivation,
remuneration, etc.
Usually a separate function within the firm.
International HRM: human resource management in
international firms.

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 International Human Resource Management
International human resource management: the
planning, selection, training, employment, and
evaluation of employees for international operations.
How a firm recruits, trains, and places skilled
personnel in its worldwide value chains sets it apart
from competition.
The combined knowledge, skills, and experiences of
employees are distinctive and provide myriad
advantages to the firm’s operations worldwide.

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 The importance of international career
development
The Jack Welch of the future cannot be
like me. I spent my entire career in the
United States. The next head of General
Electric will be somebody who spent
time in Bombay, in Hong Kong, in
Buenos Aires. … We have to send our
best and brightest over-seas and make
sure they have the training that will
allow them to be the global leaders who
will make GE flourish in the future.
Jack Welch, speech at
General Electric (1997)
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 FUNCTIONS OF IHRM
 Management of human resources in global corporations,
including issues of expatriation and repatriation.
 Implementing corporate global strategy by adapting
appropriate human resources management practices in
different national, economic, and cultural environments.
 Adopting labor relation practices in each subsidiary that
matches local requirements.

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Differences between Domestic and International IHRM
1. New HR responsibilities. E.g., international taxation,
international relocation and orientation, services for
expatriates, host government relations, language
translation services.
2. Need for a broader perspective. E.g., establishing a fair
and comparable compensation scale when there is a mix
of PCNs, HCNs, and TCNs.

3. Greater involvement in employees’ personal lives. E.g.,

housing arrangements, health care, children’s education,
safety, security, proper compensation, higher living costs
abroad.
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Differences between Domestic and International IHRM
4. Managing the mix of expatriates versus locals. The firm
may staff each location with HCNs, PCNs, and TCNs.
The mix of staff mainly depends on the firm’s
international experience, cost-of-living abroad, local
laws, and availability of qualified local staff.
5. Greater risk exposure. Exposure to political risk and
terrorism may require increased compensation and security
arrangements.

6. External influences of the nation and culture. E.g., taxes,

local work regulations, unique cultural circumstances,
traditional work practices.
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 Employee Characteristics That Facilitate International Effectiveness

 Technical Competence. Must have adequate managerial and

technical capabilities.
 Self-Reliance. Entrepreneurial, proactive mindset; expatriate
managers function with considerable independence, and limited
support from headquarters.
 Adaptability. Ability to adjust to foreign cultures, cultural
empathy, flexibility, diplomacy, and a positive attitude.
 Interpersonal Skills. Ability to build relationships is key.
 Leadership Ability. Must view change positively, and proactively
manage threats and opportunities.
 Physical and Emotional Health. Life abroad is stressful.
 Spouse / Dependents Prepared for Living Abroad.

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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 multinationals

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 Three Employee Categories at the MNE
Host-country nationals (HCNs): citizens of the country where
the subsidiary or affiliate is located. HCNs make up largest
proportion of employees that the firm hires abroad. Examples:
the labor force in manufacturing, assembly, basic service
activities, clerical work, and other non-managerial functions.
Parent-country nationals (PCNs): also known as home-
country nationals, PCNs are citizens of the country where the
MNE is headquartered.
Third-country nationals (TCNs): employees who are citizens
of countries other than the home or host country. Most work in
management; have unique skills.

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Increasing Importance of Global Human Resource
Understanding
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and
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Global
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Managing Across Borders
 International corporation  Global corporation
 Domestic firm that uses its  Firm that has integrated
existing capabilities to move worldwide operations
into overseas markets. through a centralized home
 Multinational corporation office.
(MNC)  Transnational corporation
 Firm with independent  Firm that attempts to balance
business units operating in local responsiveness and
multiple countries. global scale via a network of
specialized operating units.

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Figure 15–1 Types of Organizations

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How International Companies Affect the World
Economy
Their production and distribution extend beyond national
boundaries, making it easier to transfer technology.
They have direct investments in many countries.

They have a political impact that leads to cooperation

among countries and to the breaking down of barriers of
nationalism.

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 Staffing policy
Staffing policy
Selecting individuals with requisite skills to do a particular
job
Tool for developing and promoting corporate culture
Types of Staffing Policy
Ethnocentric
Polycentric
Geocentric

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 Ethnocentric policy
Key management positions filled by parent-country
nationals
Best suited to international businesses
Advantages:
Overcomes lack of qualified managers in host nation
Unified culture
Helps transfer core competencies
Disadvantages:
Produces resentment in host country
Can lead to cultural myopia

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 Polycentric policy

Host-country nationals manage subsidiaries

Parent company nationals hold key headquarter positions
Best suited to multi-domestic businesses
Advantages:
Alleviates cultural myopia.
Inexpensive to implement
Helps transfer core competencies
Disadvantages:
Limits opportunity to gain experience of host-country nationals
outside their own country.
Can create gap between home-and host-country operations

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 Geocentric policy
Seek best people, regardless of nationality
Best suited to Global and trans-national businesses
Advantages:
Enables the firm to make best use of its human resources
Equips executives to work in a number of cultures
Helps build strong unifying culture and informal management
network
Disadvantages:
National immigration policies may limit implementation
Expensive to implement due to training and relocation
Compensation structure can be a problem.

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 Expatriate
An employee who goes to work abroad for an extended
period, usually years
Repatriation: return of the expatriate to the home
country. Requires advance preparation. Unless managed
well, returning expatriate may encounter problems, such
as career disruptions and ‘reverse culture shock’.
Expatriate failure: the premature return of an expatriate,
due to an inability to perform well abroad. Costly to the
firm (lost productivity and relocation costs) and to
expatriates themselves (family stress and career
disruption).

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Figure 15–6 Expatriate Selection Criteria

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Figure 15–7 Causes of Expatriate Assignment Failure

• Family adjustment
• Lifestyle issues
• Work adjustment
• Bad selection
• Poor performance
• Other opportunities arise
• Business reasons
• Repatriation issues

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 Four attributes that predict success
Self-Orientation
 Possessing high self-esteem, self-confidence and mental well-being
Others-Orientation
 Ability to develop relationships with host-country nationals
 Willingness to communicate
Perceptual Ability
 The ability to understand why people of other countries behave the way
they do
 Being nonjudgmental and being flexible in management style
Cultural Toughness
 Relationship between country of assignment and the expatriate’s
adjustment to it

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 Culture Shock
The confusion and anxiety, often akin to mental depression,
that can result from living in a foreign culture for an
extended period. Often affects family members most.
A leading cause of expatriate failure.
Especially a factor for those assigned to culturally
dissimilar countries, such as China, Yemen.
Can be reduced via advance preparation, training, language
skills, deep interest in the new country.
Regular exercise, relaxation techniques, or keeping a
detailed journal of experiences are helpful.

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 THANK YOU

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